Peso weakens on Marawi attacks, China credit rating downgrade

AFP FILE PHOTO

MANILA — The peso on Wednesday weakened against the US dollar and touched the 50:$1 level partly due to investor concerns following the declaration of martial law in Mindanao after terrorists attacked Marawi City.

At the Philippine Dealing System, the peso closed at 49.995:$1 from 49.82:$1 last Tuesday.

The domestic currency hit an intraday low of 50:$1 and a high of 49.93:$1 after opening at 49.95:$1.

The total volume traded inched up to $582.4 million from Tuesday’s $572 million.

“The Philippine peso’s weakness and under-performance (relative to other Asian currencies) this morning is a combination of the local developments—martial law declaration in Mindanao and Moody’s downgrade of China’s sovereign credit rating by a notch,” ING Bank Manila senior economist Joey Cuyegkeng said.

Moody’s Investors Service warned that “China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows,” reports said.

Cuyegkeng nonetheless said that fundamentals would “take hold and support” the peso.

“We believe that favorable Philippine economic fundamentals would remain intact and would keep growth in line with an expected higher-trend growth of 6.5 percent during this administration (from 6-6.2 percent in the previous administration). Investor interest in that part of Mindanao would likely be affected but the government’s lead through infrastructure spending and programs in Mindanao would likely offset overall private sector prudence and cautiousness for that area,” Cuyegkeng said.  SFM