Peso slides on strong US data
THE PESO closed lower against the dollar on Friday on the back of upbeat US economic reports and still amid negative market sentiment due to weak Philippine gross domestic product (GDP) growth.
The local currency closed at P49.87 versus the greenback on Friday, sliding by six-and-a-half centavos from its P49.805-per-dollar finish on Thursday.
The peso traded weaker the entire session as it opened at P49.90 to the dollar, while its peak for the day was at just P49.85 versus the foreign currency. Its worst showing was at P49.945 versus the greenback.
Dollars traded went down to $473.8 million on Friday from the $527 million that changed hands in the previous session.
One trader attributed the peso’s continued slump versus the greenback to strong data on US initial jobless claims, but noted that the drop was contained due to heightened political uncertainties in the United States.
“The peso depreciated today due to upbeat US data on initial jobless claims. The peso’s drop was minimal due to political concerns involving US President Donald Trump,” one trader said by e-mail on Friday.
Latest reports from the US Labor Department bared the number of Americans who claimed to be unemployed dropped by 4,000 to a seasonally adjusted 232,000 last week, a 28-and-a-half-year low or since the figures seen in 1973.
Meanwhile, markets have become wary over US President Donald J. Trump’s ability to continue his economic and fiscal plans for the country after the tension between the US leader and 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, increased.
Meanwhile, another trader said by phone on Frisay: “The peso actually just moved in a range after the market just reacted to bad data, particularly on two things: risk-off sentiment on US after Wall Street dropped and bad Philippine GDP growth that caused the peso to weaken.”
Philippine 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.
Another trader said in a phone interview: “We saw another volatile day after the peso opened lower. Affecting the weakness of the peso I think was still uncertainty on Donald Trump and at the same time we saw a sell off on Thursday.”
The trader, however, added that the peso’s tempered decline was due to upbeat balance of payments (BoP) data in April. “If you look at the figures that should help the peso stabilize a bit since we’re always expecting BoP to be negative and in the red.”
Latest data from the Bangko Sentral ng Pilipinas (BSP) bared the country’s external payments position bounced back last month to a $917 million surplus from the $550 million deficit seen in March and higher from the $184 million surfeit in April, hitting its widest surplus in over two years due to a rebound in exports and strong remittance inflows. -- Janine Marie D. Soliman