Peso falls on political worries

The peso tumbled to another over two-month low on Thursday, closing at 47.24:$1 from 47.08:$1 last Wednesday.

The domestic currency’s close was the weakest since 47.29:$1 on March 2.

“It’s all about politics with the latest polls showing [Davao City] Mayor [Rodrigo] Duterte the likely winner of the May 9 presidential election,” ING Bank Asia chief economist Tim Condon explained of the peso’s prevailing weakness.

At the Philippine Dealing System, the peso reached an intraday low of 47.25:$1 and a high of 47.15:$1.

The total volume traded slid to $617 million from $793 million on Wednesday.

“We think a re-pricing for a Duterte victory explains the Philippine peso’s underperformance since mid-April; its 2.16-percent depreciation is the second-most in Asia after the Malaysian ringgit’s 2.19 percent,” Condon said.

ING Bank nonetheless sees the peso returning to the mid-46:$1 level post-elections.

Citing analysis by ING Bank Manila senior economist Joey Cuyegkeng, Condon noted that “in the past three presidential elections, the Philippine peso depreciated in the run-up to the election and clawed back about half of the depreciation afterwards.”

“Based on this US dollar-Philippine peso [trade] should recover to 46.5-46.6:$1,” Condon said. Ben O. de Vera