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Peso sinks to P54.13 to US$1; lowest since Dec 2005

13 September 2018


By The SUN
The peso exchange rate at today's close of trading was at P54.13 to US$1, or P6.88 to HK$1

THE Philippine peso breached the P54:$1 (HK$1:P6.88) level today, Wednesday, falling 19 centavos weaker than the previous day’s close at P53.94. 

The foreign exchange trading opened at P53.90:$1 and fell to P54.14 during the day. It closed at P54.13 per dollar, its lowest since the P54.15:$1 finish on December 2, 2005.

Shares at the Philippine stock market also continued sliding down as the Philippine peso posted its lowest finish against the greenback in 13 years, alongside escalating trade tensions between the United States and China.

The 30-company Philippine Stock Exchange index (PSEi) dropped 0.91 percent or 68.81 points to 7,449.20, marking its sixth straight day of decline. The broader all-shares index also went down 0.43 percent or 20.12 points to 4,577.16.

“The peso breaking out of its psychological 54 resistance level (i.e. peso depreciation) to make an intraday high of 54.153 may have had a hand in today’s weakness,” Papa Securities Corp. trader Gabriel Jose F. Perez said.

ING Bank Manila senior economist Joey Cuyegkeng observed that demand for the US dollar remained strong amid the peak season for imports in September to October.

“The widening trade deficit due to a weak export performance and sustained strong imports also contributes to the weak market sentiment on PHP (Philippine peso),” he said.

The government had reported that the country’s trade deficit widened significantly to $3.546 billion in July, expanding the year-to-date tally to $22.490 billion.
Imports totaled $61.234 billion during the seven-month period, surpassing $38.744 billion in exports.

Land Bank of the Philippines market economist Guian Angelo Dumalagan said the peso’s weakness could be attributed to continued trade tension between the US and China, as well as the dollar’s rally following better US jobs data.

ING’s Cuyegkeng said that while the market expected the Bangko Sentral ng Pilipinas (BSP) to raise its policy rate later this month, “such a timeframe of policy response is perceived to be unaggressive.”

“Recent developments about soaring inflation and weakening peso could prompt an earlier off-cycle move as an indication of BSP’s seriousness and aggressive response to soaring inflation, deep- in-the-red real policy rates and some political noise,” he said.

Above-target inflation has prompted monetary authorities to raise key interest rates by a total of 100 basis points since May. August’s nine-year high of 6.4 percent has raised the prospect of another rate hike when the Monetary Board meets later this month.


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