THE PESO weakened to a new 12-year low against the dollar on Wednesday, breaching the P54 level due to corporate demand and amid continued trade tensions between the United States and China.
The local unit ended the session at P54.13 versus the greenback on Wednesday, 19 centavos weaker than the P53.94-per-dollar finish logged the previous day.
This was the peso’s weakest finish in nearly 13 years or since it closed at P54.155 against the dollar on Dec. 2, 2005.
The peso traded within a very wide range, opening the session at P53.90 versus the greenback. It slipped to as low as P54.14 intraday, while its best showing stood at P53.89 versus the dollar.
Trading volume rose to $772.5 million from the $434.1 million that switched hands the previous session.
A foreign exchange trader said the peso weakened versus the US unit due to corporate demand, particularly from oil firms.
“We saw corporate demand throughout the day. I guess the P54 figure, which was the previous resistance, will now be the support due to continuous corporate demand for the dollar-peso pair,” the trader said in a phone interview.
The trader added that “mispricing in terms of the offshore market” drove corporate demand.
“We saw oil companies buying our onshore since it’s at a discount compared to the offshore. Since oil companies have to fill their contract, it’s more of the oil and power companies buying it up.”
Meanwhile, UnionBank of the Philippines chief economist Ruben Carlo O. Asuncion attributed the peso’s weakness to “continuing trade tensions between the US and China and the emerging markets’ recent turmoil” such as in Turkey and Argentina.
China requested on Tuesday the permission of the World Trade Organization to impose $7 billion in sanctions on the US in retaliation for Washington’s non-compliance with a ruling in a dispute over US dumping duties, Reuters reported.
The request came at a time of elevated trade tensions between the world’s two largest economies, with US President Donald J. Trump warning last week that he was “ready to go” with another $267 billion in levies on Chinese goods on top of the planned $200 billion tariffs.
“Being a currency of an emerging market has been a disadvantage to the Philippine peso,” Mr. Asuncion added.
For Thursday, the trader expects the peso to move between P53.95 and P54.25 versus the dollar, while Mr. Asuncion gave a P53.90-P54.20 range.
“The local currency might further weaken tomorrow ahead of the release of the US headline inflation tomorrow,” another trader said in an e-mail.
“However, expectations of hawkish communications from the European Central Bank on their monetary policy meeting tomorrow might drive away some of the greenback’s appeal,” the trader added, giving a P54-P54.20 range for Thursday’s trading. — Karl Angelo N. Vidal