THE PESO declined further against the dollar on Wednesday to hit a three-week low as investors continued to flock to safe-haven currencies due to concerns over the Turkish economy.
The local currency closed Wednesday’s session at P53.47 versus the greenback, eight centavos weaker than its P53.39 finish the previous day.
This was the peso’s weakest finish in more than three weeks since it closed at P53.48 against the US currency on July 23.
The peso traded weaker the whole day, opening the session at P53.45 per dollar, which was already its best showing for the day. Its intraday low on was at P53.535 against greenback.
Dollars traded declined to $585.9 million from the $693 million that switched hands the previous day.
A trader said the peso tested its weakest levels for the year.
“The peso was still on the defensive side along with the regional emerging market (EM) currencies even though we saw the Turkish lira improve,” he said.
The Turkish currency rallied by 6% driven by the move of its central bank limiting swap transactions to prevent short-selling, Reuters reported.
This followed an earlier move of the monetary authority to cut currency reserve requirements for domestic banks, freeing up $6 billion and additional $3 billion equivalent of gold liquidity into the financial system.
“We saw the peso…at yearly [lows] at around P53.52, but it closed at P53.47,” the trader said.
Another trader said investors pocketed gains to drive the local currency stronger in afternoon trade.
“The peso is dependent on the sentiment given there’s a lot of reasons why we continue to see risk sentiment on the downside,” the first trader said, citing the trade tensions between the United States and China as well as Turkey.
Turkey on Wednesday slapped tariffs on some US imports including cars and alcohol in retaliation to the move of Washington.
In a tweet, US President Donald J. Trump said it authorized to double the duties on Turkish steel and aluminum to 20% and 50%, respectively, saying that its relations with Ankara “are not good at this time.”
“All these things, when you combine them, it still points to pessimism. That’s why the peso remains to be on the defensive,” the first trader added, noting that an intervention by the Bangko Sentral ng Pilipinas (BSP) was seen intraday.
“There’s a BSP intervention. We saw a lot of offers near the [low].”
As the country’s monetary authority, the BSP sometimes conducts “tactical interventions” to temper any sharp swings that may cause the peso to appreciate or depreciate.
For Thursday, the traders expect the peso to move between P53.35 and P53.55.
“The peso might continue depreciating ahead of likely upbeat US housing data tomorrow and sustained pressure on the EM currencies due to the ongoing US-Turkey economic conflict,” the second trader said. — Karl Angelo N. Vidal

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