The Philippine peso returned to P47:$1 level on Monday, hitting a nearly two-month low against the US dollar as the Brexit continues to affect foreign exchange trading.
The currency fell to P47.03 to $1, losing 8 centavos from its P46.95 close on Friday last week. Friday’s finish was the weakest since May 6 when the peso slid to P47.09.
“USD/PHP was forced higher as risk currencies continued to be buffeted by the fallout from the recent Brexit decision,” said Nicholas Antonio Mapa, Bank of the Philippine Islands associate economist.
On Friday last week, the United Kingdom’s referendum campaign has secured more than majority of the vote to leave the European Union (EU).
The pound has collapsed and world stock markets have descended into pandemonium after Britain’s shock vote to leave the EU fueled global uncertainty.
“Emerging market currencies remained pressured with dealers preferring the relative safety of the dollar while end-month corporate demand also pushed the currency pair higher,” Mapa added.
Jonathan Ravelas, chief market strategist for BDO Unibank, agreed with Mapa that the peso retreat was largely due to the Brexit fallout. “At the moment this appears to be a knee-jerk reaction still on Brexit,” he said.
Singapore-based lender DBS said the uncertainties surrounding the decision of UK voters to leave the EU last week will continue to weigh on currencies and global financial markets, including here in the Philippines, but noted the turmoil may be more political than economic at this point.
“The immediate uncertainty is political. David Cameron announced that he will step down as Prime Minister and the leader of the Conservative Party,” it said.
Nevertheless, “Given the bloodbath in global financial markets last Friday, there is little appetite for a prolonged period of uncertainty,” it added.
The peso opened lower at P47.05 to $1 on the Philippine Dealing System (PDS) before trading between P46.96 and P47.18.
Total volume transacted declined to P551 million from P621.5 million in the previous session.