Peso dips to 9-month low of 49.01 to $1

MANILA, Philippines - The peso hit a nine-month low of 49.01 to the dollar during intra-day trading yesterday on the back of renewed risk aversion, traders said.

At the close of trading, however, the peso managed to recover to settle at 48.900, after it opened at 48.850 against the dollar. Yesterday’s close was 15 centavos lower than Tuesday’s close of 48.750 against the dollar.

Total trading volume amounted to $802.98 million on an average rate of 48.888 to $1.

Traders said investors are still wary of the current global economic conditions and that there might be “too much hype” on the so-called worldwide economic recovery.

“There is recovery but recovery is weak,” said Jonathan Ravelas, market strategist of Banco de Oro Universal Bank.

Another dealer said the central bank intervened to support the peso but monetary authorities denied this.

“The dollar-peso opened strong due to risk aversion, but the central bank was well on the offer to support the peso,” a dealer said.

BSP Deputy Governor Diwa Guinigundo said during a budget hearing at the House of Representatives yesterday that talks of BSP’s intervention in the foreign exchange market are just rumors.

 “Those rumors are not true. We are neither supporting or working against the peso,” Guinigundo said.

Traders said the 1.5 percent economic growth in the second quarter of the year also disappointed investors.

Although the 1.5 percent expansion was faster than the government’s forecast range of -0.1 percent to 0.9 percent, investors expected a higher growth, traders said.

Ravelas said that BDO, for instance, expected a 2.3 percent growth in the second quarter given the pick-up in consumption and continued dollar inflows from overseas Filipino workers (OFWs).

The economy grew by only 0.4 percent in the first quarter of the year. For 2009, the government expects gross domestic product to grow anywhere from 0.8 percent to 1.8 percent.