FOR THE THIRD straight day the Philippine peso closed near its latest record low amid rate cut worries even as the stock market fell even as investors continued to take profits.
The currency ended one and a half centavos weaker at P59.445 to the US dollar near mid-January’s fresh low of P59.46.
The benchmark Philippine Stock Exchange index (PSEi) shed some 84.92 points or 1.32 percent to close at 6,352.86 while the broader All Shares also fell, by 37.39 points or 1.03 percent, to 3,606.81.
Meanwhile, volume rose to US$1.211 billion from US$1.118 billion previously.
Accordingly, a trader claimed that the local currency’s depreciation remained driven by expectations of a February rate cut by the Bangko Sentral ng Pilipinas (BSP) despite slim chances of a similar move by the Federal Reserve the preceding week.
He explained that “the weakness of the peso might persist in view of potentially upbeat readings on the US gross domestic product (GDP) and personal consumption expenditure (PCE) inflation later this week, which might solidify views of a prolonged policy hold from the US Central Bank.”
Maybank Investment Banking Group economist Azril Rosli commented that several structural factors were likely to lead to the peso underperforming relative to regional peers, including the flood control project scandal as well as foreign sentiment.
“However, if you look on the positive side, the positive inputs are the offsetting factors, which include the BSP’s more than adequate reserve buffers, providing intervention capacity,” Rosli noted.
“In the near term, some dollar pullback after recent strength may provide temporary relief for the peso and allow it to avoid breaching the P60 level,” he quipped.