Peso drops further on US, GDP
THE PESO continued to slide versus the greenback on Thursday after markets resorted to safe-haven buying amid heightened political uncertainties offshore and due to weaker-than-expected Philippine economic growth in the first quarter.
The local currency finished at P49.805 against the dollar yesterday, four-and-a-half centavos down from its P49.76-per-dollar finish on Wednesday.
The peso opened the session weaker at P49.84 to the dollar, while its peak for the day was seen at P49.78 versus the foreign currency. Its worst showing was at P49.90 versus the greenback.
Dollars traded climbed to $527 million on Thursday from the $453 million that changed hands in the previous session.
One trader attributed the peso’s decline against the dollar the risk-off sentiment among investors as uncertainty mounted over US President Donald J. Trump’s future following reports that he tried to interfere with a federal investigation.
Pressure on the White House has intensified after Mr. Trump fired Federal Bureau of Investigation (FBI) Director James Comey, who had been leading a federal probe into possible collusion between Mr. Trump’s 2016 campaign team and Russia.
Later, Washington was rocked by reports that Mr. Trump had asked Mr. Comey to end the FBI investigation into ties between Mr. Trump’s first national security adviser, Michael Flynn, and Russia, a serious allegation that could lead to Mr. Trump’s impeachment if verified. The Justice Department has named former FBI chief Robert Mueller as special counsel to investigate the alleged Russian interference.
“Impeaching Donald Trump was a pipe dream for the Democrats but extremely unlikely to most other observers until a few days ago. Whether it would succeed is another story,” said Greg McKenna, chief market strategist at AxiTrader.
“As it drags on, it hurts sentiment and threatens the administration’s agenda, especially around tax and infrastructure.”
“Philippine GDP also came out below market expectations. That brought the dollar to go as low as P49.90 level,” the first trader said.
Economic growth in the January to March period logged at just 6.4%, well below a government estimate of 7% and the official 6.5-7.5% target for the year.
For Friday, one trader said the peso may play within P49.75 to P49.90 versus the greenback while the other said the exchange rate may settle within P49.75 to P49.95 range.
“The dollar might remain relatively strong due to the soft growth report of the Philippines,” one trader noted.
The Korean won was the biggest loser among Asian currencies, sliding as much as 0.8% in its biggest intra-day percentage fall in nearly five weeks.
South Korean President Moon Jae-in said on Wednesday there was a “high possibility” of conflict with North Korea, which is pressing ahead with nuclear and missile programmes it says are needed to counter US aggression.
The Singapore dollar hit a six-month high before reversing course to trade slightly down.
The yen weakened 0.3%, shrugging off data that showed Japan’s economy grew in the first quarter at its fastest pace in a year to mark the longest period of expansion in a decade.
The Chinese yuan was slightly down after four sessions of gains. -- J.M.D. Soliman with Reuters