Peso declines vs dollar on global growth fears

Font Size

Peso Dollar
THE PESO weakened further due to dovish remarks from ECB President Mario Draghi.

THE PESO declined further against the dollar on Thursday, dragged by dovish remarks from the European Central Bank (ECB).

The local unit closed yesterday’s session at P52.75 versus the greenback, down 14 centavos from the previous finish of P52.61.

The peso traded weaker the whole day, opening the session at P52.71 per greenback. It reached as low as P52.85 intraday, while its best showing of the day stood at P52.70 against the dollar.

Trading volume grew to $929.72 million from the $704.2 million that changed hands on Wednesday.

Traders attributed the weaker peso versus the dollar yesterday on risk-off sentiment brought by “dovish” comments from ECB President Mario Draghi on Wednesday.

“We saw the dollar index higher overnight given the drop in euro and pound. This stemmed from the dovish remarks of ECB President Draghi,” a trader said in a phone interview yesterday.

“Still, we saw risk-off sentiment brought by fears of slower global growth among countries.”

At a conference in Frankfurt, Germany, Mr. Draghi echoed his previous pronouncements that risks to growth in Europe remain intact, and that the central bank may need to lessen the effects of negative interest rates.

“Just as we did at our March meeting, we would ensure that monetary policy continues to accompany the economy by adjusting our rate forward guidance to reflect the new inflation outlook,” Mr. Draghi said.

For today, the trader expects the peso to move between P52.60 and P53, while another trader gave a slightly slimmer P52.60-P52.90 range.

Most other Asian currencies also weakened on Thursday, hurt by a stronger US dollar after more central banks adopted dovish policy stances in response to a deteriorating global economic outlook.

The dollar index against a basket of six major currencies strengthened 0.1% to 96.878, as its peers went on the defensive.

The US yield curve remained inverted, a phenomena that has drubbed global markets in recent days. If it persists, the inversion could indicate that a recession is likely in one to two years.

“The dollar has actually held up well, because other central bank have out-doved the Fed,” said Khoon Goh, the head of Asia research for ANZ. — K.A.N. Vidal with Reuters