External uncertainties caused the peso to close on Friday at its weakest level in 10 years – at 50 to a dollar compared to 50.09 back in Nov. 15, 2006.
“It’s still the same story of external market uncertainty,” Deputy Governor Diwa C. Guinigundo of the Bangko Sentral ng Pilipinas said in a text message to reporters. “And despite market uncertainty about a March US Fed interest rate hike, there was higher demand from corporates today. This drove the peso to touch P50 to a dollar level. We continue to see negative market sentiment dominating the strong Philippine market fundamentals.”
But he added: “We should see the market reacting to news that overseas Filipino workers’ remittances remain resilient and growth prospects remain very positive at the back of strong consumption, investment, and public expenditures. In real terms, the peso remains competitive and we continue to monitor pressure from weak exchange rate even as the exchange rate pass through to domestic inflation has gone down in recent years. There is no substitute to constant monitoring and surveillance for any possible risks in the horizon.”
According to Emilio S. Neri Jr., vice president and chief economist of the Bank of the Philippine Islands, “Importers appear to have had a more significant-than-usual demand while the regular sellers were not as active in today’s trading session.”
“Inflation-wise, there is no cause for panic,” he said. “We don’t see a significant pass through effect on CPI [consumer price index]. This is just a 0.56-percent year-to-date decline or a negative 4.26-percent decline per annum – still much slower than the 5.35-percent depreciation in 2016.”
At the Philippine Dealing System, the peso reached an intraday low of 50 and a high of 49.94 to a dollar.
The domestic currency closed weaker even as it opened at 49.94 to a dollar, stronger than Thursday’s close of 49.97.
The total volume traded rose to $480 million from $376.5 million last Thursday.
In a report issued this week, Standard Chartered Bank said that a recent survey showed that “Philippine clients exhibit the most bearishness” as far as foreign exchange is concerned.
Standard Chartered said the bearish outlook was “possibly affected by two years of forex underperformance and protectionist rhetoric from the US.”