Peso nears 49 vs $1, slides to 7.5-year low
The peso on Friday plummeted to a seven-and-a-half-year low that hovered near the 49:$1 level, reflecting the slide in the local stock market, which fell below the 7,000 mark.
The domestic currency closed the week at 48.95:$1, the weakest since April 28, 2009’s close of 48.995:$1.
At the Philippine Dealing System, the peso hit an intraday low of 48.96:$1 and a high of 48.77:$1.
The total volume traded jumped to $707.5 million from $357 million last Thursday.
“The US dollar-Philippine peso [pair] was pummeled into submission, soaring higher as the dollar continued to lord it over emerging market currencies. Foreign investors were also heading for the exits as fast as they could, pulling down the peso after the PSEi (Philippine Stock Exchange index) broke through the 7,000 handle,” Bank of the Philippine Islands associate economist Nicholas Antonio T. Mapa said.
The PSEi slid to 6,975.09 Friday, reflecting the slump in regional markets over jitters mainly brought about by Donald Trump’s win in the US presidential race.
READ: Stocks, peso weaken on Trump fears
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo told reporters Thursday that monetary authorities were “not concerned about the level of the exchange rate.”
“As you know, the exchange rate is driven by both fundamentals and sentiment. At one point, the peso was a lot weaker. But in earlier years, the peso was doing [a stronger] 43-44:$1,” Guinigundo explained.
“It’s more on the volatility in the foreign exchange market that we have to monitor regularly. It’s important that we keep the volatilities in check because that can affect the sentiment of the business community as well as investor sentiment,” the BSP official said.
BSP data showed that the peso not only depreciated at a faster pace than most other regional currencies but also became more volatile during the first three months of the Duterte administration.
READ: Peso slightly weakens on Trump win
The peso’s volatility, or the magnitude of fluctuation against the US dollar, jumped to 0.58 percent between July 1 and Oct. 4, compared with 0.16 percent in early July.
At the start of the year, volatility was also at a lower 0.35 percent.
During the July 4 to Oct. 4 period, the peso depreciated 2.72 percent against the US dollar.
Only the Malaysian ringgit’s depreciation of 3.15 percent was faster than the peso.
“We need to keep our ears on the ground so that if there’s a need for an adjustment in policy, we’ll be able to do that in expeditious way,” Guinigundo said. RAM
