Peso down on risk-off sentiment as Britain’s EU exit stays in limbo

THE PESO weakened on Wednesday after a plan for the United Kingdom’s exit from the European Union was thumbed down, adding more uncertainty to the market.
The local currency closed at P52.13 versus the dollar yesterday — its peak for the day — shedding 10 centavos from its P52.03-per-dollar finish on Tuesday.
It was relatively flat from its P52.14-per-dollar open for the session. Its intraday low, meanwhile, stood at P52.22 against the greenback.
The volume of dollars traded was thinner on Wednesday’s close at $679.2 million from $1.061 billion in the previous trading day.
Traders said funds returned to the dollar as plans for Brexit, set on March 29, remain in limbo.
“The local currency weakened today amid global risk-off sentiment after the Brexit deal proposed by Prime Minister Theresa May was overwhelmingly rejected by the British Parliament yesterday,” a trader said via email on Wednesday.
The rejection adds more pressure to UK’s prime minister to come up with a better deal on the country’s exit from the European Union in a shorter time frame — which may also lead to a vote of no confidence in the government that may trigger a general election.
Failing to make a clear arrangement on Brexit will also weigh on the UK’s economy.
Another trader shared this view, adding that the local currency tracked other currencies in the region.
“So the peso was lower today because of the dollar recovery overnight. We’re just moving in line with other currencies. There’s nothing specific on the peso, it’s really just the dollar strengthened overnight,” a trader said in a phone interview on Wednesday.
The first trader sees the peso trading stronger later this week ahead of data on US retail sales.
“Exchange rates might move within the 52.05 and 52.25 range,” the first trader said. — E.J.C. Tubayan