• AT P45.20:$1

    Peso sags to 15-mth low

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    The peso lost further value on the first trading day of the week from Thursday’s close, reaching its weakest level against the US dollar in nearly 15 months ahead of the Federal Open Market Committee (FOMC) meeting.

    Currency markets around the world, including the Philippines’, have been speculating nervously about the timing of an interest rate hike by the US Federal Reserve, which would boost the value of the dollar and draw investor interest away from other currencies.

    The peso finished at P45.20, easing 5 centavos from the P45.15 close on Thursday of the holiday-shortened trading week last week. Monday’s close is the peso’s weakest rate since March 21 last year, when the local currency settled at P45.29.

    Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), said the general strength of the dollar can be traced to investors’ anticipation of the outcome of the June 16 to 17 FOMC meeting.

    “The Fed appears closing in on its first rate hike,” he said.

    Mapa also sees Greece’s continuing debt crisis fueling the dollar’s strength.

    Foreign selling on the Philippine Stock Exchange also helped pull down the peso, driving several offshore dealers to cut their short-USD positions against the local currency, he added.

    “Meanwhile, with corporates seeing the upmove in USD/PHP, dollar buyers snatched up requirements in case the currency pair floats higher, exacerbating the upmove,” the economist said.

    “Just as in the past, when momentum was all in favor of the peso strength, the odds are now stacked against the peso as foreign players book gains and scramble for the exits,” Mapa added.

    Total volume transacted on the PDS fell to $584.350 million from $683.900 million traded Thursday.

    Need to reassess market
    Earlier, Singapore-based bank DBS said was time to reassess the market and see that it had been overly optimistic about the peso, given the expected easing of exports to normal levels this year.

    Last week, DBS said the peso looked set to lose strength beyond the P44 – P45 range, on assumptions that Philippine merchandise exports were likely to grow at a moderate pace of 3 percent this year from 9 percent in 2014, given the state of the global economy.

    “As for depending on exports for growth, the PHP will find it increasingly hard to ignore the depreciation in other Asian currencies. The USD/PHP may well be thinking about breaking above 44 to 45 later this year,” it said.

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