Peso slides to 42-to-dollar level as US economy improves
MANILA, Philippines — 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 currency closed at 42.14 to a dollar on Thursday, after two days of touching the 41: $1 level. Thursday’s close was weaker than the Wednesday’s 42.01: $1.
The peso traded between 42.079 and 42.215 after opening at 42.12: $1. Trading volume was a more modest $1.067 billion from $1.25 billion the day before.
BDO chief market strategist Jonathan Ravelas said the peso’s weaker close reflected the overall expectation of the continued recover of the world’s largest economy.
“Over the medium term, the dollar will get stronger,” he said, adding that investors have been slowly abandoning their previous expectation that the peso would strengthen to below the 40: $1 before the end of 2013. “What we’re seeing is a correction on the global front,” he said.
He said the local currency could make a march toward the 43: $1 level if more signs emerged indicating the strength of the US economy, which would lead to higher demand for the greenback.
