Peso recovers slightly
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Mon, 06 Jan 2020 16:20:52 +0000
THE Philippine peso recovered slightly against the US dollar on Monday and climbed back to P50:$1.
The local currency, which opened at P51.08 against the greenback, gained 16 centavos to close at P50.93 — a rebound from its 41-centavo loss on Friday last week.
ING Bank Manila senior economist Nicholas Antonio Mapa said: the “peso managed to post a strong afternoon session with select market players unloading dollar holdings after the currency pair edged up over the past two trading sessions and a half.”
“Reports of a possible dollar bond issuance may have also helped bolster the peso for the time being with investors looking to inflation data tomorrow and trade later this week for fresh cues,” he added.
Mapa also pointed out that the foreign exchange trading direction in the coming sessions will be driven by any additional developments in tensions between the United States and Iran.
Tensions between the US and Iran started after the killing of one of Iran’s top commanders,
Qassem Soleimani in a US airstrike near Baghdad International Airport, which was ordered by US President Donald Trump to prevent attacks on US personnel in Iraq.
Meanwhile, IHS Markit APAC chief economist Rajiv Biswas said the “escalation in US-Iran tensions over the past few days has created increasing concerns in financial markets about risks of a regional conflict.”
This has resulted in support for safe haven assets, with the gold prices surging. Brent crude oil prices are also up sharply on fears of disruption to oil flows through the Strait of Hormuz, a critical supply route for world oil shipments, he continued.
That said, Biswas warned: “In a scenario where oil prices surge significantly higher due to rising geopolitical tensions in the Middle East, this would be adverse for Asian asset classes and currencies, including the PHP (Philippine peso) and Philippines equities, as it would raise fears about rising inflation and weaker economic growth.”
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 to P52.00 to $1 exchange rate assumption for the year.