Peso dips as investors await next move of US Federal Reserve
By Paolo G. Montecillo
The peso closed weaker again on Tuesday in another day of weak trading as investors stayed in the sidelines ahead of the US Federal Reserve meeting this week.
The peso closed weaker again on Tuesday in another day of weak trading as investors stayed in the sidelines ahead of the US Federal Reserve meeting this week.
The peso closed weaker at the start of the week after thin trading on Monday tracking the movement of regional currencies as funds flow out of Asia.
The Bangko Sentral ng Pilipinas has shrugged off concerns over volatility of the country’s financial markets this week, describing the sharp drop in the Philippine Stock Exchange Index (PSEi) as a healthy correction and the depreciation of the peso back to the 43-to-a-dollar level as tolerable
The Bangko Sentral ng Pilipinas is seen favoring a weakening of the peso against the dollar following the double-digit decline in export receipts and the higher jobless rate posted by the country in April.
The peso slumped on Tuesday, weakening back to the 43-to-a-dollar territory as signals that the US and Japanese central banks are allowing their stimulus programs to taper off dampened appetite for emerging market currencies.
The peso erased most of its gains made earlier this week as the dollar strengthened amid the expectation of a sustained improvement in the US economy.
The local stock market on Thursday suffered its worst bloodbath in two years as high risk aversion across the region overshadowed good tidings from the stronger-than-expected first quarter Philippine economic growth data.
After manifesting higher volatility than usual throughout trading hours on Thursday, the peso closed at 42.32 against the US dollar, up by 12 centavos from the previous day’s finish and the 11-month low of 42.44:$1.
The peso fell to the 42-to-a-dollar territory on Wednesday, registering its weakest close in nine months, as reports of an improving economy of the United States pushed demand for the greenback and led to the dumping of emerging-market currencies.
The peso slightly dropped on the first trading day of the week amid concerns China might be headed for a slower growth.
The Philippine peso is expected to appreciate further and may hit 37.50 against the US dollar within the next 12 months, according to Goldman Sachs, citing the likelihood of a surge in foreign portfolio investments.
The peso was almost unchanged on Wednesday as the market digested reports the Japanese central bank is poised to continue with its heavy bond buying to stimulate the world’s third-biggest economy out deflation.
