Peso plunges on China

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THE PESO dropped due to slower Chinese economic growth.

THE PESO plunged further against the dollar to a one-month low yesterday, dragged by renewed concerns of a global growth slowdown due to slower Chinese economic growth.

The local currency ended Monday’s session at P52.80 versus the greenback, dropping 28.5 centavos from its P52.515 finish last Friday. This is the peso’s lowest finish in a month or since it closed at P52.86 against the US currency on Dec. 21.

The peso opened the session weaker at P52.60 versus the dollar, already its best showing for the day. Meanwhile, it traded to as low as P52.81-a-dollar intraday.

Dollars traded surged to $1.006 billion from the $807.22 million that changed hands the previous session.

A foreign exchange trader attributed the weakening of the peso to the fourth-quarter Chinese gross domestic product (GDP) growth report, which came in softer than the previous quarter.

China’s GDP growth for the fourth quarter stood at 6.4% year-on-year, slightly slower than the 6.5% in the July-September period. For the full year, the Chinese economy grew 6.6%, marking the slowest pace in 28 years, which came at a time of a continuing trade spat with the United States, its largest trading partner.

However, another trader said the disappointing Chinese economic report did not have any effect on the peso-dollar movement yesterday as it was already factored in during the previous trading sessions.

“We saw the same story. The dollar continued to rally, given that we continued to break the resistance levels and that the dollar remains supported…by the continued optimism from the trade talks,” the trader said in a phone interview.

For today, the second trader expects the peso to trade between P52.70 and P53, while the other gave a P52.70-P52.90 range.

“The peso might depreciate further on speculations of a possible second Brexit referendum,” the first trader noted. — K.A.N. Vidal