November 25, 2017 | MANILA, PHILIPPINES

Peso closes at P50-per-dollar, lowest in more than 10 years

THE PESO on Friday closed at P50 against the US dollar, dropping to its lowest level in more than a decade due to strong demand from corporates, and persisting uncertainty over the timing of the US Federal Reserve’s interest rate hikes and US President Donald J. Trump’s plans.

The local currency closed at P50 versus the greenback on Friday, the lowest level since the P50.12 recorded on November 16, 2006. The peso was three centavos lower from the P49.97 a dollar finish on Thursday.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said the local currency weakened over the same negative sentiment in external markets.

“Still the same story of external market uncertainty. And despite market uncertainty about a March US Fed interest rate hike, there was higher demand from corporates today. We continue to see negative market sentiment dominating the strong Philippine market fundamentals,” said Mr. Guinigundo in a mobile phone message.

“We should see (the) market reacting to news that OFW (overseas Filipino workers) remittances remain resilient and growth prospects remain very positive at the back of strong consumption, investment and public expenditures,” he added.

On Friday, the market opened at P49.94, which was also the lowest for the day, before hitting the P50-per-dollar level as its intraday high.

Friday’s session, however, saw more dollars traded, rising $480 million from the $376.5 million from that changed hands during the previous session.

Traders attributed the peso’s depreciation to the increased possibility of a Fed rate hike in March after US Fed Chair Janet Yellen gave hints during her economic testimony before Congress on Tuesday.

Reuters had reported that Ms. Yellen hinted more rate increases were on the way as the US jobs market has improved and inflation has shown signs of nearing the Fed’s 2% goal.

Another trader noted that the market is on a “wait-and-see” stance of Mr. Trump’s announcement on the details of his “phenomenal tax plan.”

However, another trader said that the peso might even drop lower than P50 per dollar on Monday.

“[T]he dollar has been strengthening against major and regional currencies for the past few days, but the resistance of the P50 level hasn’t been breached but it was tested today, so we’re going to see if it will break through and trade higher on Monday,” said the trader. -- Elijah Joseph C. Tubayan