THE PESO slipped to another near 11-year low amid strong appetite for the dollar intraday despite upbeat Philippine economic growth data and dovish minutes form the US Federal Reserve.
The peso closed at P51.355 versus the greenback yesterday, almost unchanged from Wednesday’s finish of P51.35-to-the-dollar. Still, it was the local unit’s weakest close in almost 11 years or since it ended at P51.38 a dollar on Aug. 25, 2006.
The peso opened the session at P51.25 against the dollar. Its best showing was at P50.17, while its weakest intraday level was at P51.38 versus the greenback.
Trading volume was at $688 million, down from the $824.7 million that changed hands in the previous session.
Traders attributed the peso’s flat close to stronger demand for the greenback despite faster Philippine gross domestic product (GDP) growth and the Federal Open Market Committee (FOMC) minutes.
“It was basically a quiet trading day. Towards the end of the day we saw demand for the dollar still on tensions between the US and North Korea. Basically the movement of the peso was really political despite Philippine GDP and the FOMC minutes,” one trader said by phone.
Similarly, another trader said: “Although the dollar initially traded lower due to dovish FOMC minutes and there was a brief reaction intraday on the Philippine GDP data, but it was only a knee-jerk because GDP was already priced in to go higher.”
A third trader said on Thursday: “The peso initially appreciated today due to stronger Philippine GDP growth in the second and concerns in the FOMC minutes about easing US inflation. The peso’s gain, however, was temporary, as the local currency again weakened towards the end of the day, still because of persistent expectations of another US rate hike this year.”
Reuters reported the minutes of the Fed’s July 25-26 meeting bared policy makers worrying of weak US inflation, with some noting of not hiking interest rates.
Meanwhile, the Philippine economy grew 6.5% in the second quarter, picking up from the 6.4% in the previous quarter.
For today, one trader said the exchange rate could settle within P51.20 to P51.50, while the second trader sees the peso at P50.25 to P50.45 per dollar. The third trader said the peso could move within the P51.30 to P51.50 range.
“There might be sideways movement due to scarcity of fresh leads. A slight upward bias for the peso might be observed, as some investors might take profit ahead of the weekend,” one trader said. — J.M.D. Soliman