Peso nears 48 to $1 level

MANILA, Philippines - The peso yesterday flirted with the 48 to $1 level amid the strong demand for the greenback as well as concerns about the tirades made by President Duterte against known allies of the Philippines. 

The peso shed 16 centavos to close at 47.99 from Thursday’s 47.83 to $1. It opened at 47.60 and hit an intra-day low of 48 to $1. 

This was the weakest level since the local currency closed at 47.995 to $1 last Jan. 29. 

Volume of trade amounted to $590.5 million, higher than Thursday’s $502.855 million. 

Traders believe there is a strong demand for dollar from companies that usually import more raw materials in the third quarter in preparation for the strong demand during the Christmas season. 

“There is strong corporate demand for dollars as the third quarter is an importation quarter,” a trader said. 

The Bangko Sentral ng Pilipinas (BSP) kept the country’s monetary policy stance unchanged on Thursday amid the strong domestic demand and the benign inflation environment. 

Likewise, the US Federal Reserve kept interest rates unchanged but signaled it could tighten monetary policy by the end of this year. 

BSP Governor Amando Tetangco Jr. said earlier the holding off of further action by the US Fed showed it could be a little bit more patient in the normalization of interest rates. 

“For our markets this may mean that we could possibly see some slowing in the weakness of the peso in the near term until the next Fed meeting again. It may even encourage very short term trades to squeeze some more juice from the carry,” he said. 

Tetangco added monetary authorities would continue to monitor developments to determine excessive market reactions. 

According to him, the recent weakness in the peso has been due to a number of factors including the actions of the US Fed, Bank of Japan, and the European Central Bank. 

“It is normal price action that in the run up to these meetings, volatility heightens and markets become defensive and take profit on positions. Of particular interest relative to the peso is the Fed action,” he said.