The Philippine peso dropped to P44.81 to a dollar on Wednesday on the account of weaker regional currencies against a stronger dollar.
The local currency shed 21 centavos from the P44.60 a dollar close on the previous day, as the dollar turned higher against Asian currencies after suffering a sell-off in the previous two sessions following an unexpectedly weak set of US jobs data.
The greenback changed hands at 103.43 yen in Tokyo afternoon trade, up from 102.98 yen in New York City on Monday afternoon, but still well down from levels near 105 yen in Asia last week. The euro bought 141.27 yen and $1.3659, against 140.77 yen and $1.3670 in US trade.
The greenback got a boost on Tuesday from dip-buying, and after data showed Japan’s current account deficit tripled year-on-year to a record 592.8 billion yen in November.
Japan has been posting widening deficits in the current account—its broadest measure of trade with the rest of the world—as energy costs surge after the country’s nuclear reactors were shut down in response to the Fukushima disaster.
On the other hand, the greenback was mixed against other Asia-Pacific currencies. It rose to Tw$30.02 from Tw$29.96 on Monday, to Sg$1.2672 from Sg$1.2647 and to 1,058.50 South Korean won from 1,056.80 won.
Meanwhile, the peso is seen to stay at the P44 level as more imported products are seen to enter the Philippines this year.
A government source earlier said that the local currency may range between P41 to P44 a dollar, as reconstruction in the typhoon-devastated areas may require more imported construction materials.
For its part, Standard Chartered Bank in a report said that the peso may average to P43 to a dollar at year-end, as the expected increased in remittance inflow this year may be “more muted” for the peso.
“The remittance dynamic is a clear positive for the Philippine peso and comes against the backdrop of recent upside surprises in the Philippines export growth, which trimmed the late-2013 trade deficit. However, there are grounds for caution in using the remittance dynamic as the basis for a broader constructive case for the Philippine peso,” the bank stated.
“For the moment, we maintain a neutral short- and medium-term weighting for the Philippine peso. More benign global financial market conditions should lay the basis for a modest Philippine peso rebound later in 2014,” it added.
With reports from AFP