Peso weakens as Trump-Comey reports spark uncertainty in US
THE PESO weakened anew against the dollar on Wednesday, snapping a four-day gain amid political noise offshore and after it tracked the greenback’s direction overnight.
The local currency finished at P49.76 against the foreign currency yesterday, declining by eight centavos from its P49.68-per-dollar finish on Tuesday, a three-week high.
The local currency opened the session at its intraday peak of P49.71 against the dollar, while its worst showing for the day was at P49.77 versus the greenback.
Dollars traded slid to $453.5 million yesterday from the $701 million that changed hands in the previous session.
One trader attributed the peso’s decline against the dollar to political uncertainty in the United States, particularly between US President Donald J. Trump and former Federal Bureau of Investigation (FBI) Director James Comey.
“We saw a generally weaker dollar overnight because of what came out on political concerns between Donald Trump and FBI Director, which saw the dollar slip to a seven-month low,” the trader said in a phone interview yesterday.
The dollar tumbled on Wednesday on worries about more US political turmoil after media reports said Mr. Trump asked Mr. Comey to end a probe into the president’s former national security advisor.
Mr. Trump asked Mr. Comey to end the FBI investigation into ties between former White House National Security Advisor Michael Flynn and Russia, according to a source who has seen a memo written by Comey.
Mr. Trump later fired Mr. Comey whose dismissal sparked a furore which was soon followed by more outrage over Trump’s alleged sharing of classified intelligence with Russian Foreign Minister Sergei Lavrov at a meeting in Mr. Trump’s office.
The reports raised questions over whether obstruction of justice charges could be laid against Mr. Trump, weakening confidence in the US president’s ability to push through an aggressive stimulus program that investors had been banking on since his election in November.
“But again, emerging market currencies were mixed against the peso. We suspected some fixing demand,” the trader said.
For Thursday, two traders said the peso-dollar exchange rate may range between P49.65 and P49.85.
“The peso might appreciate amid expectations of upbeat Philippine GDP (gross domestic product) growth in the first quarter,” one trader noted.
The country’s GDP growth in the first quarter likely hit 6.8%, according to a BusinessWorld poll last week, on the back of robust domestic consumption, larger government spending and export recovery.
Socioeconomic Planning Secretary Ernesto M. Pernia had said he expects the economy to have grown by around 7% in the January to March period. The government is targeting a 6.5-7.5% economic growth for this year.
The Philippine Statistics Authority is set to release official GDP data today.
ASIAN UNITS RISE
In contrast, most emerging Asian currencies inched up on Wednesday as the dollar came under further pressure due to the Trump-Comey reports.
“As reporting intensifies on Trump’s potential mishandling of classified information, markets are becoming concerned whether key legislation on tax reforms could be deferred or derailed,” said Mizuho Bank in a note.
The tumult at the White House prompted currency traders to ditch the dollar to favour a broad range of currencies, most notably against the yen, to which investors often turn as a safe haven when there are problems in the United States.
The yen strengthened 0.7% against the dollar to touch a more than one-week high.
The dollar was also dented by a report that US housing starts dropped 2.6% to a seasonally adjusted annual rate of 1.17 million units, the lowest level in five months, hurt by persistent weakness in the construction of multi-family housing.
In other Asian currencies, Malaysian ringgit appreciated 0.1% against the dollar. Meanwhile, the Korean won reversed earlier gains to fall 0.3%, as traders took profits after currency hit six-week high a day earlier.
The yuan nudged higher on Wednesday after China set its official midpoint at 6.8635 per dollar prior to the market open on Wednesday, its strongest level since February 17, reflecting the US currency’s weaker global trend. -- J.M.D. Soliman with Reuters