The peso moved sideways on Friday, April 20, generally unchanged from the previous day’s level due to lack of leads.
The local unit ended the week at P52.095 versus the dollar, little changed from the P52.10 finish on Thursday.
The peso opened at P52.16 versus the greenback, weaker than the previous day’s closing rate. It hit P52.17 as its intraday peak and touched a low of P52.09 versus the greenback before settling at the closing rate.
Traders interviewed on Friday pointed out quiet trading during the session, as market players await for key data that would serve as catalysts for further foreign exchange movements.
“The peso moved sideways on Friday. The markets are quiet and volume is low,” one trader said in a phone interview, as she noted that there was “broad dollar strength” overnight.
Dollars traded on Friday amounted to just $329.5 million, just half of the $654.45 million that exchanged hands the previous day.
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, added that investors may simply be staying on the sidelines ahead of key economic data due early next month.
“I am expecting this to be a long-wait for investors until the first week of May when GDP (gross domestic product), inflation, and the BSP decision all come out. Although I am for a stay in May, I see players positioning themselves to get the most out of forex,” Mr. Asuncion said via e-mail.
Analysts have been pointing out that the trend weakness of the peso comes amid concerns on domestic inflation and a widening current account deficit, as well as mounting calls that the Bangko Sentral ng Pilipinas (BSP) needs to tighten rates.
The country’s balance of payments position settled at a $266-million deficit in March, improving from a $429-million deficit in February and a $550-million shortfall a year ago. This brought the first-quarter tally to a $1.227 billion deficit, a tad higher than the $1-billion gap expected by the BSP for the entire year.
BSP Deputy Governor Diwa C. Guinigundo, however, said that trends in the foreign exchange market remain driven by strong demand for dollars to support robust importations as the Philippine economy expands.
“The depreciation of the peso is something one should expect,” Mr. Guinigundo said, pointing out the increased need for capital goods, raw materials and intermediate products.
BSP officials have said that they remain comfortable with the movements in the daily currency trading, but pointed out that they maintain presence in the market to smoothen any sharp swings. — Melissa Luz T. Lopez