Peso falls anew on news of economic growth slowdown in Asia
MANILA, Philippines—The peso, together with other Asian currencies, fell once more on Thursday amid speculations economies in the region might grow this year at paces slower than earlier anticipated due to a likely moderation in demand for their export goods.
The decline of the peso and other major Asian currencies was also credited to projections that the US Federal Reserve may no longer push through with a plan to conduct a third round of stimulus for the US economy.
The local currency closed at 42.52 against the US dollar on Thursday, down by 4.5 centavos from Wednesday’s finish of 42.475:$1.
Intraday high hit 42.46:$1, while intraday low settled at 42.565:$1. Volume of trade fell to $716.10 million from $825.03 million previously.
Traders said the drop of the peso came with the release of unfavorable imports report. According to the National Statistics Office, imports by the Philippines fell by 7.9 percent in June from that recorded the previous month.
On year-on-year terms, imports in July grew by 6.6 percent, slower than the double-digit earlier expectations for the year.
Some economists are of the view that the drop in imports, a significant portion of which are raw materials for export goods, indicate that firms in the country are foreseeing a decline in demand from their usual foreign buyers due to sluggish growth of industrialized countries.
In the meantime, there are speculations that the US Federal Reserve may no longer pursue an earlier announcement that it would inject more cash, through bond purchases, into the US economy.
The Fed has already done two rounds of stimulus, quantitative easing 1 and 2 (QE1 and QE2), for the US economy. The US Fed said it could implement a QE3, but some economists said the likelihood that this would happen might have diminished. This is because of some unfavorable effects of too much global liquidity on emerging markets, which are already confronted with steeply rising foreign portfolio investments, which are said to be causing appreciation of Asian currencies to the disadvantage of Asian exporters.
