THE PESO continued to slide versus the greenback on Tuesday, hitting another fresh low in nearly 11 years, amid strong demand for the foreign currency. The local unit finished at P50.77 yesterday, declining by seven centavos from its P50.70-per-dollar finish on Monday.
Yesterday’s close was also the worst finish for the peso in close to 11 years, or since it closed at P50.795 per dollar on Aug. 31, 2006.
The peso opened the session at P50.73 versus the foreign currency, closer to its strongest level for the day at P50.70 per dollar, while its intraday trough was seen plunging as low as P50.83 against the greenback.
Dollars traded stood at $653 million on Tuesday, climbing from the $255.950 million that changed hands on Monday.
Traders attributed the weaker peso to a stronger dollar on the back of strong appetite for the greenback intraday.
“Initially there was demand for the dollar, it went as high as P50.83 level but then it was sold towards the afternoon,” one trader said by phone on Tuesday.
Similarly, another trader said, “The market closed higher on the back of strong buying interest, there was foreign demand.”
However, the trader mentioned that against major peers, emerging currencies appeared to have weakened versus the dollar.
“Externally, it looks as if the dollar-peso pair has a lot of dollar gain movement from other major currencies. Majors showed a weaker dollar,” the trader said.
“The other night there was news about Mr. Trump’s healthcare bill that may not be passed and it seems emerging currencies had a late reaction to this. So against emerging currencies, there was risk-off reaction on our side, hence, market still bought the dollar despite of what happened,” the trader added. Reuters reported that the passage of US President Donald J. Trump-backed healthcare legislation was in doubt after the Republican party failed to get enough votes in the Senate.
“But overall, there was really demand for the dollar,” the trader concluded.
Similarly, the other trader said, “Generally, it was just a pure trading day, small corporates were demanding for the dollar during the session.”
The trader also mentioned there was no apparent intervention from the Bangko Sentral ng Pilipinas (BSP) during the whole session.
As regulator of the Philippine financial system, the BSP sometimes steps in currency trading to temper any sharp swings in the peso. The trade also noted: “Market sentiment is still negative on the peso because they’re waiting for the SONA (State of the Nation Address.)”
President Rodrigo R. Duterte will deliver his second SONA on July 24.
For Wednesday, one trader said the exchange rate could settle within P50.70 to P50.87 while the other trader said the peso could trade between P50.60 to P50.90 versus the greenback. — Janine Marie D. Soliman