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
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.
