Weakening further against the US dollar, the peso slipped to another fresh low of 50.695 on Monday, the weakest so far this year as the greenback strengthened due to expectations of better prospects for the US economy.
This is also the lowest the peso has reached since Sept. 1, 2006, when it was 50.700 against $1.
Still at an almost 11-year-low, the local currency had an intraday low of the same value against $1 and a high of 50.580, the same as Friday’s peso close.
Meanwhile, the total volume traded sank to $439 million from Friday’s $515 million.
“The USD has been supported by the strong US payrolls data last Friday, which showed 222,000 job gains and indicated continued strength in the US economy,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit.
This helped the US dollar edge higher against both the Philippine peso and the Japanese yen, Biswas added.
“One concern from the Philippines external account side is that the balance of payments and current account could post small deficits in 2017, according to BSP (Bangko Sentral ng Pilipinas) forecasts,” the IHS Markit economist said, adding that this could cause further decline in foreign exchange reserves in the second half of 2017.
Meanwhile, increasing imports and “a likely deterioration of the trade deficit” are factors strengthening the greenback, said Joey Cuyegkeng, senior economist at ING Bank Philippines.
“Market continues to factor in a weaker current account and balance of payments this year and assess the possibility for 2018 as the economy continues to expand due to strong domestic demand and investments,” Cuyegkeng said. “We are also in the midst of rising seasonal USD demand of local importers.”
In a note to clients, Metrobank Research says it expects the peso-dollar pair to trade within the range of 50.000-51.000:$1 this week. –Frances Josephine E. Espeso, Inquirer Business intern /atm