Peso dips as US dollar seen to gain ground in currency war

AFP FILE PHOTO

MANILA, Philippines—The peso fell slightly on Wednesday as global talks about a currency war is seen allowing the US dollar to gain ground.

The local currency closed at 40.655 against the US dollar, down by 2.5 centavos from the previous day’s finish of 40.63:$1.

Intraday high hit 40.60:$1, while intraday low settled at 40.67:$1.

Volume of trade reached $790.2 million from $475.9 million previously.

The rise of the peso came amid speculation that there is an ongoing currency war among several economies. Currency war is characterized by efforts of countries to deliberately weaken their currencies against the US dollar in order to boost their export sectors.

The Bangko Sentral ng Pilipinas earlier said the Philippines would not engage in the currency war, but measures implemented in other countries that would lead to the depreciation of their currencies could boost the US dollar.

Jonathan Ravelas, market strategist for Banco de Oro, said the minimal decline of the peso on Wednesday would be due more to the strengthening of the US dollar amid talks of a currency war rather than the deteriorating appetite for the peso or peso-denominated securities.

While the peso dropped against the greenback on Wednesday, the Philippine Stock Exchange Index hit a new record high of 6,648.57.

Ravelas said foreign exchange inflows have remained significant, but its impact on the exchange rate has been neutralized by the strengthening of the US dollar resulting from global economic developments.

“Flows, such as investments in the stock market, remain strong. The decline of the peso simply reflects a slowly changing trend for the dollar amid the so-called currency war,” Ravelas said.