THE PESO weakened on the first trading day of the year on the back of the losses in the stock market and as some investors stock up on their dollar ahead of the uncertainties throughout the year.
The local unit closed at P50.685 versus the greenback on Thursday, depreciating by five centavos from its finish of P50.635 per dollar on Dec. 27, according to data from the Bankers Association of the Philippines’ website.
The peso opened the year’s first trading session at P50.60 against the dollar. It dropped to as low as P50.715, while its intraday best was at P50.565 versus the greenback.
Dollars traded dropped to $944.55 million from the $1.33 billion on Friday last week.
A depreciation of the local unit will be a trend as a new year comes, according to a trader.
“The peso was weaker on the back of some demand as corporates were buying the dollar given the start of the year. The dollar usually goes up during the start of the year as some clients would buy already to hedge against other uncertainties,” the trader said in a phone call.
Although the peso’s close on Thursday is “a good start” given that it is still within its typical range from the past days, the trader said continued uncertainty in the US-China trade talks and profit taking is also to blame for the slight weakness in the local unit.
On Dec. 31, Reuters reported that US President Donald J. Trump said the Phase 1 of the trade deal with China would be signed on Jan. 15 at the White House, although he did not speak much of the details of the agreement which left some confusion for the market.
The US president wrote in a tweet that he would sign the deal with “high level representatives of China” and that he would later travel to Beijing to begin talks on the next phase.
Despite the peso’s depreciation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso-dollar exchange rate on Thursday is still among its “strongest in the past two weeks and in nearly two years.”
“Peso was also weaker today after the net foreign selling at the local stock market at -$16.9 million, after the previous trading day’s -$16.1 million…amid regulatory risks on water utilities and TV network recently,” he said via text on Thursday.
For today, the trader expects the peso to play around the P50.60-50.90 range, while Mr. Ricafort thinks the local unit will move around the P50.55-50.80 levels. — L.W.T. Noble with Reuters