THE PESO plunged against the dollar on Tuesday, dragged by market uncertainty following the appointment of Budget Secretary Benjamin E. Diokno as the new Bangko Sentral ng Pilipinas (BSP) chief.
The local currency ended Tuesday’s session at P52.24 versus the dollar, 52 centavos weaker than the P51.72-per-dollar finish last Monday.
The peso traded weaker the whole day, opening the session at P51.80 against the greenback. It logged a peak of P51.79 and hit an intraday trough of P52.26 per dollar.
Trading volume soared to $1.483 billion from $1.094 billion the previous day.
Foreign exchange traders attributed the peso’ depreciation to the appointment of Mr. Diokno as the new central bank chief.
“The peso opened at P51.80, but that was just short-lived. It rose to as high as P51.90 within a span of 15-20 minutes. There were heavy buying in the market — it reached as high as P52.20 in the afternoon session” a trader said in a phone interview.
“Although the inflation was better than expected, this was mainly driven by the market uncertainty regarding our new BSP governor,” the trader added, noting that the dollar was also stronger overnight against a basket of major currencies.
President Rodrigo R. Duterte has chosen Mr. Diokno to replace the late BSP Governor Nestor A. Espenilla, Jr., officials announced Monday night.
Finance Secretary Carlos G. Dominguez said Janet B. Abuel, Budget undersecretary in charge of the Local Government and Regional Operations Group, will serve as the Budget department’s officer-in-charge.
UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said the markets may have viewed the appointment of Mr. Diokno as a surprise.
“A lot were expecting an insider to be chosen. This appointment may have the market thinking of government influencing monetary policy more than usual,” Mr. Asuncion said.
“However, this may also be just a knee-jerk reaction as we will know how the new governor plans to move forward as he starts his term.”
Before markets opened, the Philippine Statistics Authority reported that headline inflation stood at 3.8% in February, slower than the 4.4% figure in January and within the 2-4% target band of the central bank.
The slowdown was attributed to tempered increases in food and non-alcoholic beverage costs, particularly rice, corn and vegetable among others.
Mr. Asuncion added that the positive inflation figure was factored in by the market, although the “bigger story was Diokno and the reaction to his appointment.”
For today, Mr. Asuncion expects the peso to move between P51.90 and P52.20 versus the dollar, while the trader gave a wide range of P52 to P52.50. — Karl Angelo N. Vidal