Home Banking & Finance Peso ends at P51:$1 level despite BSP call for calm
Peso ends at P51:$1 level despite BSP call for calm
THE PESO started the week at a near 11-year low, closing at the P51-per-dollar level, due to negative market sentiment amid heightened political tensions between the United States and North Korea.
The peso closed at P51.08 against the dollar on Monday, slumping 10 centavos from Friday’s finish of P50.98 per dollar.
Yesterday’s close was the local unit’s weakest level in almost 11 years or since it ended at P51.21-to-the-dollar on Aug. 28, 2006.
The peso opened the session at P50.95 against the dollar. Its best showing was at P50.90, but it succumbed to the dollar’s strength as it closed at its intraday low.
Traders attributed the peso’s slump against the dollar to persisting geopolitical tensions between US and North Korea, with investors resorting to safe-haven buying.
“In the morning, we saw market players looking at US inflation data, but towards the afternoon was when the dollar rallied due to safe haven demand still due to tensions between US and North Korea,” one trader said by phone yesterday.
The US Labor Department said on Friday its consumer price index (CPI) edged up 0.1% last month after being unchanged in June. That lifted the year-on-year increase in the CPI to 1.7% from 1.6% in June.
“The peso, however, weakened towards the end of the day amid concerns over the conflict between the US and North Korea,” the trader added.
In contrast, another trader said yesterday’s session mostly quiet, noting that the peso’s decline was more of a trend rather than sentiment-driven.
Trading volume on Monday thinned to $291.5 million from the $690.1 million seen the previous session.
The trader also noted the Bangko Sentral ng Pilipinas (BSP) did not step in during yesterday’s session, as seen in lower volumes of dollars traded.
“The BSP was not seen heavily selling dollars [yesterday,] because probably there was really demand for the dollar.”
The trader also said that despite the central bank’s efforts to calm markets, the local unit still continues to decline versus the dollar, with the BSP “not aggressive in protecting” the currency.
BSP Governor Nestor A. Espenilla, Jr. said on Sunday that they do not foresee a sharp decline on the peso versus the dollar as the country’s economic fundamentals remain “very solid and very strong.”
For today, one trader sees the exchange rate settling at P50.95 to P51.15 range while the other trader said the peso could trade within P50.90 to P51.20-to-the-dollar.
The other trader, meanwhile said the exchange rate’s technical levels could go to as low as P51.21 to P51.55 per dollar. — Janine Marie D. Soliman with Reuters