Peso weakens further to track yen’s drop

The peso dropped further against the dollar on Tuesday to follow the yen’s decline as markets expect the Japanese government to support its falling currency.

The local unit closed at PHP 58.91 per dollar, weakening by four centavos from its PPHP 58.87 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened the session lower at PHP 58.93 against the greenback. Its intraday best was at PHP 58.84, while its worst showing was at PHP 58.935 versus the dollar. Dollars traded inched up to USD 1.169 billion on Tuesday from USD 1.167 billion on Monday.

The peso dropped “with the US dollar/Japanese yen still among 10-month highs recently at ¥156 levels after the latest stimulus plan as the new prime minister is expected to adopt pro-growth policies,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The dollar-peso closed a tad higher, trading at a narrow range amid lack of market movers,” a trader said in a phone interview.

For Wednesday, the trader sees the peso moving between PHP 58.80 and PHP 59.10 per dollar, while Mr. Ricafort expects it to range from PHP 58.80 to PHP 59.05.

The Japanese yen remained on intervention watch on Tuesday, Reuters reported.

Despite the greenback’s slight weakness this week, the Japanese yen has been on the defensive, trading at JPY 156.70 per dollar, not far from the 10-month low of JPY 157.90 that it touched last week.

Traders have been waiting for signs of government intervention to support the Japanese currency, which has weakened by nearly ¥10 since the start of October after fiscal dove Sanae Takaichi took over as Japan’s prime minister.

Verbal jawboning from government officials has failed to stem yen weakness. Market analysts believe an official intervention, similar to moves last year and in 2022, could be on the cards. — A.M.C. Sy with Reuters