Businessworld: Peso falls by 12.5 centavos

Peso falls by 12.5 centavos

By IRA P. PEDRASA, Reporter

The peso yesterday plunged by 12.5 centavos against the dollar following what traders said was a big correction for the greenback's value versus most regional currencies.

It went to as low as PhP56.40 in early trade, wiping out gains in the last few days. It settled at PhP56.335 against the dollar.

"The sentiment is still for a weak dollar but it was already due for some correction. Besides, central banks in other countries have been saying that their currencies should not appreciate too much. Intervention talk abounds," a trader at a local bank said.

A strong local currency makes export products less competitive in the global market, thus stunting the growth of export-oriented businesses, analysts said.

The Japanese yen, after hitting multimonth highs at ¥102, traded at ¥105.15 at the last count. Talks abound that the Japanese central bank was looking at a ¥105.5 resistance to even-off the strength of the dollar.

"[Locally], the banks also continued covering their short-dollar positions, taking profit at trading after previous days of continuous selling," the trader added.

Oil and other manufacturing companies also came in to purchase dollars as they anticipated a bigger correction for the dollar. Total volume of transacted dollars increased to $291.3 million against $287.3 million previously.

Seeing that the PhP56.40 resistance can't be breached, banks that already took some profits tried to unload their dollars until the peso settled at PhP56.335.

"I think a lot of banks were also hit by their stop-loss requirements. There are limits within banks by which one can only loose a certain amount for a day. So whatever the current value, they'll just have to trade there," the trader added.

At the Philippine Dealing System, the country's electronic currencies exchange, the peso averaged weaker by more than 17 centavos to PhP56.335 from PhP56.164. It opened at its intraday high of PhP56.25.

Against the previous day's close of PhP56.21, it indicated that the peso was bound to depreciate for the day.

"It was an expectation, that was why a lot of trades came in today," the trader added.