THE PESO depreciated on Thursday as fears of a global recession gripped financial markets following the inversion of the US Treasury yield curve.

The local currency closed at P52.545 versus the greenback on Thursday, shedding 26.5 centavos from Wednesday’s P52.28 finish.

The peso opened the trading session at P52.35 versus the dollar, which was also its strongest performance during the day. Its lowest point was recorded at P52.62 against the greenback.

Dollars traded surged to $1.661 billion from the $1.27 billion that exchanged hands the previous day.

“The peso weakened sharply on renewed global recession concerns after the US Treasury yield curve inverted overnight, with the 10-year yield briefly falling below the US 2-year yield,” a trader said via e-mail on Thursday.

Most Asian currencies weakened on Thursday as recession warnings from the US bond market dented investor risk appetite, cutting short a modest respite after the United States delayed some tariffs on imports from China.

The US Treasury 30-year bond yield slumped below 2% for the first time on Thursday as fears of a global recession gripped financial markets and drove investors towards safe haven assets.

Most regional units had appreciated on Wednesday as US President Donald Trump’s decision to delay tariffs eased tensions in the Sino-US trade war, as the currency markets also shrugged off weak numbers from a raft of Chinese data.

“Any positives from Trump’s partial delay in tariff imposition looks to be quickly forgotten. Overall, the climate remains stacked against the Asian currencies,” said OCBC Bank in a note, while underscoring growth worries and aversion to riskier assets.

Fresh global growth worries now warrant more monetary easing from the US Federal Reserve, while the persistent trade war pressure may also force Beijing to implement more aggressive stimulus steps to bolster growth.

Maybank analysts said in a note that given the complex state of geopolitical risks now, sharp swings in sentiment could be more common going forward.

The Indonesian rupiah weakened as much as 0.5% to 14,305 against the dollar despite a modest improvement in economic fundamentals.

Data from Indonesia’s statistics bureau showed Southeast Asia’s largest economy posted a smaller-than-expected trade deficit in July after two months of surpluses.

The Thai baht and the Malaysian ringgit lost as much as 0.2% each.

Indian and South Korean markets were closed for a holiday.

The Chinese yuan edged lower after posting its best intraday percentage gain in nearly eight weeks in the previous session on the Trump administration’s tariff delay decision.

However, optimism over a modest easing in trade tensions evaporated in no time as Trump tied protests in Hong Kong to a trade deal with Beijing, urging China to seek a human resolution to the city’s months-long political crisis.

The local currency might trade weaker today amid global risk-off sentiment, a trader said.

The trader expects the peso trading within a range of P52.40 and P52.70 today. — MTA with Reuters

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