THE PESO depreciated slightly on Monday following the appreciation of the Chinese yuan and as markets continue to factor in a possible global growth slowdown due to the novel coronavirus outbreak.
The local unit finished trading at P50.78 versus the dollar on Monday, weakening by 2.50 centavos from its Friday close of P50.755 against the greenback.
The peso opened at P50.85 per dollar. Its weakest showing for the session was at P50.855, while its intraday best was at P50.74.
Dollars traded dropped to $581.4 million from $771.92 million last Friday.
Traders attributed the peso’s depreciation to developments related to the coronavirus outbreak.
Asked about the factors that may have affected market sentiment for currency exchange today, a trader said in a phone call: “Most likely Chinese yuan kasi nag-appreciate ’yung yuan when the inflation data was released this morning above expectation siya. So lumakas ’yung Chinese yuan and na-drag ’yung peso (It’s most likely the Chinese yuan because it appreciated when inflation data was released this morning and it was above expectations. So the yuan got stronger and the peso was dragged down).”
Inflation in China hit an eight-year high of 5.4% in January, going beyond the 4.9% forecast in a Reuters poll of analysts.
The Chinese yuan appreciated by 0.2% to 6.9891 per dollar on Monday, according to Reuters.
Most emerging Asian currencies also firmed on Monday as Chinese authorities lifted some work restrictions and implemented measures to support the economy, though concerns around the virus outbreak persisted due to a mounting death toll.
Workers began trickling back to offices and factories around China on Monday as the government eased some restrictions on working in the wake of the coronavirus epidemic that has now killed more than 900 people, mostly on the mainland. Meanwhile, another trader attributed the decline to market worries on the virus.
“The peso weakened amid renewed global slowdown concerns from the novel coronavirus outbreak,” the trader said in an e-mail.
S&P Global Ratings said in a report on Friday that the coronavirus crisis would probably stabilize globally by March, “with virtually no new transmissions in April.”
“Of course, the virus has global reach and there will be feedback effects on China as other economies adjust and global financial conditions shift,” it said.
For today, the first trader gave a forecast range of P50.70-P51.00 while the second trader said the peso might move within the P50.70-P50.90 range. — L.W.T. Noble with Reuters