Peso weakens further on geopolitical noise
THE PESO extended its losing streak against the dollar to a third straight day as it tracked its regional peers due to safe-haven buying, still amid lingering geopolitical tensions offshore.
The peso closed at P49.725 against the greenback yesterday, sliding by eight-and-a-half centavos from its P49.64 finish on Tuesday.
The local currency opened Wednesday’s session at its intraday peak of P49.65 per dollar. Its intraday low was at P49.78 versus the foreign currency.
Dollars traded climbed to $436.5 million on Wednesday from the $339.4 million that changed hands the previous session.
One trader said the peso continued to decline against the dollar as it followed the movement of other regional currencies.
“The dollar-peso moved higher... as we’re seeing Asian currencies weaker also, so the peso is just tracking the move of its regional peers. It’s one with the region,” the trader said in a phone interview.
The trader noted that offshore developments also affected the pair’s movement.
“We’re also seeing a lot of volatility... The market’s on risk aversion on geopolitical tensions abroad, which we continue to see,” the trader said, referring to political noise involving the United States against Syria, Afghanistan and North Korea.
Reuters reported that the United States and South Korea -- with the cooperation of China -- forged a stronger alliance against North Korea as it persisted to conduct more nuclear and missile tests after it failed to launch last Sunday.
US officials say tougher sanctions could include an oil embargo, a global ban on North Korea’s airline, intercepting cargo ships and punishing Chinese banks doing business with Pyongyang. They say greater Chinese cooperation is vital.
On a similar note, another trader said in an e-mail yesterday: “The peso continued to depreciate still because of safe-haven buying amid geopolitical concerns abroad, including the presidential election in France and the tension between the US and North Korea.”
The French presidential elections will be held on April 23.
“Mixed US reports on industrial production and housing provided minimal trading guidance,” the trader said.
Latest data from the US Commerce Department bared that US homebuilding declined in March to 6.8% to a seasonally adjusted annual rate of 1.22 million units.
Meanwhile, the US Federal Reserve said in a report that manufacturing production likewise slid 0.4% last month anchored by a 3% drop in the output of motor vehicle and parts, its first decline in seven months.
For today, one trader sees the peso playing between P49.60 and P49.80 against the dollar while the other trader said the pair may trade within P49.65 to P49.85.
“The peso might still depreciate due to persistent geopolitical concerns in other countries. The balance of trade report of the Euro area and Japan might also provide some trading guidance,” one trader noted.
Some Asian currencies eked out gains on Wednesday as caution set in following British Prime Minister Theresa May’s call for an early general election, which sent the sterling soaring to a more than six-month high on Tuesday.
The strength in the sterling pressured the dollar index, which tracks the greenback against a basket of six major currencies, to trade near three-week lows.
The dollar was further weighed by dismal US housing data pointing to weaker economic growth in the first quarter. That added to growing views that the prospect of a Federal Reserve interest rate hike in June looked slim.
Analysts said political uncertainty stemming from the first round of the French presidential election this weekend and tensions over North Korea also capped gains in Asian currencies. -- Janine Marie D. Soliman with Reuters