The peso recorded a fresh five-year closing low of P46.81 to $1 on the first trading day of the week as traders took a more bearish view of China’s foreign exchange policy stance, economic slowdown and equities market slump.
The Philippine currency lost 31 centavos from Thursday’s closing level of P46.50 and finished Monday’s trade at its weakest level since June 7, 2010, when the peso traded at P46.83 to the dollar.
Total volume transacted on the PDS fell to $572.5 million from $699.7 million traded previously.
The country’s financial markets were closed on Friday for a national holiday.
An analyst at the Bank of the Philippine Islands (BPI) said the currency markets have turned overly bearish, dumping risk assets as attention turned to China’s economic and market conditions and their global impact.
BPI associate economist Nicholas Antonio Mapa said more bad news came out of China on Friday with the release of the Caixin PMI Manufacturing numbers showing a drop to 47.1 in August.
Sentiment found no other support when oil slipped below $40/barrel briefly and Wall Street finished down more than 3 percent on Friday.
“Peso trading was pretty much in line with the rest of the region… panic, fear and hysteria have taken over,” Mapa said.
Given such pervading sentiment, the peso may trade between P46.60 and P46.90 against the dollar in the near term if markets continue to panic, the BPI analyst said.
“We’re getting second-quarter GDP [gross domestic product data]from the US, the UK and the Philippines [soon], which should drive the direction [of the currency markets]. Other markets worth noting would be anything related to China and commodity prices,” he said.
“Any hint of a rebound in China and subsequently oil prices, should turn sentiment around but for now, it’s rough sailing ahead,” he added.