Peso drops to P51:$1 level on coronavirus

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THE PESO succumbed to the P51 level against the greenback on Wednesday as investors continue to prefer safe-haven assets amid fears of a continued rise in cases of the coronavirus disease 2019 (COVID-19) outside China and a sell-off in the local stock market.

The local unit ended trading at P51.035 versus the dollar, weakening by 7.5 centavos from its Monday close of P50.96, according to data from the website of the Bankers’ Association of the Philippines.

The peso opened at P51.085 per dollar. Its weakest showing for the day was at P51.13 while its intraday best was at P50.99 versus the greenback.

Dollars traded on Wednesday went up to $1.43 billion from $1.303 billion on Monday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso’s weaker finish on Wednesday was due continued risk aversion in the market amid losses in the local bourse.

“The peso exchange rate closed among the weakest in four months amid sharp sell-off in the local stock market for the second straight day, to new 15-month lows,” he said.

The benchmark Philippine Stock Exchange index closed Wednesday’s session down by 277.60 points or 3.86% at 6,909.84.

Reuters reported that Japan’s Nikkei stock index slid 0.92%, while shares of Japan’s Dentsu Group, Inc, an advertising agency deeply involved in the planning and operation of the games, fell to a seven-year low on Wednesday.

“[There was] increased global market risk aversion to safe assets amid the sell-off in riskier assets, leading to stronger dollar versus emerging market currencies,” Mr. Ricafort said.

Meanwhile, a trader said the peso continued to weaken amid heightened fears of new cases of COVID-19 outside China.

“The peso continued to depreciate from elevated global coronavirus concerns following the sharp increase in cases in Europe and from contagion fears to the US,” the trader said in an e-mail.

Reuters reported that COVID-19 has already affected some 80,000 people across the world and caused the death of more than 2,600 people, majority of whom are in China.

For today, Mr. Ricafort gave a forecast range of P50.90 to P51.20, while the trader expects the peso to move within the P51 to P51.20 levels. — L.W.T. Noble with Reuters