MANILA, Philippines — 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 local currency was already lower at opening, depreciating to 42.82 to $1, before closing at 42.875: $1, weaker than the close of 42.81: $1 last Friday.
This was a result of a day of weak trading, which saw the peso reaching a low of 42.965: $1 and a high of 42.82: $1. Trading volume settled at $611 million, significantly lower than the $1.065 billion in the previous session.
The recent decline in the peso, which saw the currency fall below the 43: $1 level last week, comes amid fears that the United States Federal Reserve would scale back its monetary easing as the world’s largest economy starts to recover.
A stronger US economy will attract most investors that had previously taken shelter in emerging markets like the Philippines amid the financial crisis in developed economies.
Last week, a report by Citi said the Bangko Sentral ng Pilipinas (BSP) would likely favor a weaker peso following the decline in the country’s exports receipts in April. A weaker local currency means more pesos for every dollar earned by exporters, improving their competitiveness in the region.