Peso dips to 56.86 to $1

MANILA, Philippines — After snapping its six-day losing streak last week, the peso weakened slightly yesterday, shedding four centavos to close at 56.86 to $1 from Friday’s 56.82.

The local currency opened weaker at 56.85 and hit an intraday high of 56.84 before hitting an intraday low of 57.07 in the afternoon. Trading volume fell by 22.1 percent to $897.2 million from $1.15 billion.

The peso closed at an all-time low of 57.18 to $1 on Thursday due to the hawkish US Federal Reserve that has resulted in the strengthening of the dollar against major currencies in the region.

Domini Velasquez, chief economist at China Bank, said the peso depreciated minimally on Monday as investors are awaiting the US inflation print.

Velasquez said a higher-than-expected figure would likely lead to dollar gains as it cements recent hawkishness from US Federal Reserve officials.

“Among Asian currencies, the peso’s weakness is driven by fundamental factors such as increasing current account deficit. Although price effects for imported items have subsided, weaker-than-expected exports receipt compensated and led to another trade deficit high,” Velasquez said.

Latest data from the Philippine Statistics Authority (PSA) showed the country booked an all-time high $5.93 billion trade deficit in July, 69 percent wider than the $3.51 billion shortfall recorded in the same month last year.

This after imports jumped by 21.5 percent to $12.14 billion in July from $9.99 billion in the same month last year, while exports retreated by four percent to $6.21 billion from $6.49 billion.

The country’s total trade deficit in the January to July period reached $35.75 billion, wider than the $21.46 billion in the same period last year.

Security Bank chief economist Robert Dan Roces said there was a retracement due to re-positioning in the foreign exchange market amid speculations of further rate hikes by the Bangko Sentral ng Pilipinas on the back of the Fed’s pace.