THE peso traded weakly and returned to the P45 territory on Monday, hitting a five month low as the dollar gained impetus from an improved US jobs data.
Monday’s trading saw a 15centavo decline for the peso from P44.87 on Friday. It closed at P45.02, the weakest level since January 8 when a dollar fetched P45.06.
The local currency opened at P45.10-to-$1 on the Philippine Dealing System (PDS) before trading between P45.15 and P45.02.
Total volume reached $822.100 million from $670.700 million traded Friday.
An economist said a stronger dollar can be traced to the 280,000 additional US jobs in May – beating expectations of 226,000.
“The strong job creation numbers in US released last Friday pushed up 10year bonds to 2.41 percent, a sizeable jump from 2.12 percent end-of-May. This and the more promising outlook will attract capital flows into the US and make the dollar stronger,” Dr. Victor Abola, economist at the Univesrity of Asia and the Pacific, said.
Abola pointed out the disappointing 5.2 percent growth the Philippine economy posted in the first quarter was sufficient enough for foreign investors on the Philippine Stock Exchange to liquidate positions.
“We have witnessed six weeks of continuing outflows by foreigners from the stock market. Thus, the peso has depreciated logically,” he said.
The economist noted, however, a weaker peso is not bad at all as it tends to stimulate the economy, particularly consumer spending , as overseas Filipino workers get more out of remittances, as well as exporter earnings.
“This is needed because the government is slow to spend the money it has budgeted. Besides, our studies show that peso depreciation has very little effect on inflation, to which conclusion the BSP (Bangko Sentrla ng Pilipinas) has reached from its own studies,” he said.