THE PESO weakened versus the greenback on Monday amid risk-off sentiment following tensions between US-China’s as well as the further contraction of the local manufacturing sector.
The local currency finished trading at P50.595 versus the dollar, weakening by 19.5 centavos from its P50.40 close last Thursday, according to data from the Bankers Association of the Philippines.
The local unit opened the session at P50.55 versus the dollar. Its weakest showing was at P50.62 while its intraday best was at P50.54 against the greenback.
Volume of dollars traded sank to $349.35 million on Monday from the $906.8 million seen on Thursday.
A trader said the peso’s depreciation on Monday came amid risk-off sentiment following news that the US is looking to impose new tariffs on China.
“The peso depreciated after the recent threat of new tariffs from President Trump escalated market fears of renewed US-China geopolitical tensions,” the trader said in an e-mail.
Reuters reported that US President Donald J. Trump threatened new tariffs on Beijing as Washington heads on for retaliatory measures over the outbreak.
Sources told Reuters that the US is looking into a range of options against China but these are in their early stages.
“We signed a trade deal where they’re supposed to buy, and they’ve been buying a lot, actually. But that now becomes secondary to what took place with the virus,” Mr. Trump told reporters, as reported by Reuters. “The virus situation is just not acceptable.
Aside from this development on the US-China trade relations, weaker local data also hurt the peso’s strength, according to Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
“The peso was also weaker after the latest decline in Philippine manufacturing data,” Mr. Ricafort said in a text message.
The manufacturing sector saw contraction in April as factories faced shutdowns due to the lockdown done to prevent the spread of the coronavirus disease 2019 (COVID-19).
On Monday, IHS Markit released the Philippine Purchasing Managers’ Index which dropped to 31.6 in April from the 39.7 seen in March as well as the 50.9 logged a year ago.
A reading below 50 indicates contraction in the manufacturing sector.
“Production fell rapidly, while new orders and export sales declined at record paces,” IHS Markit said.
For today, the trader sees the peso moving between P50.50 to P50.70 versus the dollar while Mr. Ricafort gave a forecast range of P50.45 to P50.70. — Luz Wendy T. Noble with Reuters