Peso slides to weakest level in over 2 months
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Fri, 03 Jan 2020 16:14:34 +0000
THE Philippine peso dropped to its weakest level in more than two months, returning to P51:$1 on Friday.
The local currency, which opened at P50.65 against the greenback, lost 41 centavos to close at P51.09. It was the peso’s softest finish since the P51.13:$1 closing on October 25 last year.
Analysts from Rizal Commercial Banking Corp. (RCBC), Union Bank of the Philippines and Security Bank Corp. blamed the peso’s performance on developing tensions between the United States and Iran.
RCBC economist Michael Ricafort said the performance was largely brought about by higher global oil prices, which was up by nearly $2 per barrel to hit its highest in three-and-a-half months.
This is “amid increased tensions between the US and Iran after the killing of one of Iran’s top commanders, Qassem Soleimani, [in] a US airstrike near Baghdad airport, [which was] ordered by US President [Donald] Trump to prevent attacks on US personnel in Iraq,” he added.
According to him, Ayatollah Ali Khamenei threatened that the Islamic Republic would retaliate over the killing.
“The peso exchange rate was also weaker after the Christmas and New Year…holiday weekends…[when there were accumulated US dollars converted to pesos for holiday-related spending by OFWs (overseas Filipino workers) and their families/dependents],” Ricafort explained.
For his part, UnionBank chief economist Ruben Carlo Asuncion said “the market reacted [by moving] toward safe havens, as much is still being digested in this new year.”
He projects the peso to range between 50.90 and 51.20 next week.
Security Bank Assistant Vice President and economist Robert Dan Roces said “guidance on where FX [foreign exchange] is headed will be informed as the situation develops over the weekend, and escalation in tensions [would] probably lead to some depreciation tendencies against the greenback.”
Last year, the peso ended at P50.63 against the dollar, marking a 3.70-percent appreciation from the P52.58:$1 posted on Dec. 28, 2018 and fell below the government’s P51.00-52.00:$1 exchange rate assumption for the year.