Peso tops 51:$1 level, closes at fresh low of 50.98
THE peso breached the 51 a dollar level on Friday before closing at a fresh 11-year low against the greenback, pulled down by geopolitical concerns, including the rising tensions between North Korea and the United States.
The peso lost P0.18 to close at 50.98 from 50.795 Thursday. It was its weakest level since the 51.05 on Aug. 29, 2006. Total volume traded reached $690 million from $692 million previously.
The peso opened Friday’s trading P0.11 weaker at 50.90 from Thursday’s close of 50.795. The local currency dropped to an intra-day low of 51.08 to a dollar.
North Korea on Thursday announced a detailed plan to send a salvo of four missiles over Japan and toward the US territory of Guam in the Pacific, raising the stakes in a standoff with US President Donald Trump and mocking him as “bereft of reason.”
But Trump warned North Korea against striking Guam or any of its allies, saying his earlier threat to unleash “fire and fury” on Pyongyang if it launched an attack might not have been tough enough.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said the regulator was constantly monitoring the movement of the peso for excessive short-term volatility not consistent with underlying economic fundamentals.
He added that Bangko Sentral was ready to “take appropriate action when necessary. We recognize that the market is also often self-correcting.”
Johanna Chua, Citi managing director and head of Asia-Pacific Economic and Market Analysis Research, said in a briefing in Makati City the peso was one of the “worst performers among currencies in the region.”
But she said it was natural for the foreign exchange to adjust if there was some volatility, adding any weakness was good for the exporters, overseas Filipino workers and their families, as well as the business process outsourcing industry.
“We, however, do not see it as a source of fundamental concern because the Philippines is now in a favorable economic environment,” Chua said. She said the local currency’s movement was also a result of increasing imports amid the expanding economy.
Chua predicted the peso would close at 51.10 per dollar by the yearend, significantly weaker than 49.72 in the last trading day of 2016.
Security Bank Corp., in a daily market report, said geopolitical risk “continued to be the driver this Asian session as the US dollar was again bought against the major currencies... ”
Earlier, Espenilla said he was not alarmed by the movement of the peso against the US dollar, saying its weakness was “not unusual.”
He said the movement actually just reflected market conditions and underlying fundamentals and that it was the nature of the exchange rate to fluctuate. He said the Bangko Sentral would let the exchange rate reflect underlying market conditions.