Peso weakens further on geopolitical risks

The peso weakened further on Tuesday to end near its record low following fresh tariff threats from US President Donald J. Trump and rising political risk in Japan.

The local unit closed at PHP 59.341 versus the greenback, declining by 8.1 centavos from its PHP 59.26 finish on Monday, data from the Bankers Association of the Philippines data showed.

This was its worst showing in nearly a week or since its all-time low close of PHP 59.355 per dollar recorded on Jan. 7.

The peso opened Tuesday’s trading session slightly weaker at PHP 59.28 versus the dollar. Its intraday best was at PHP 59.26, while it dropped to as low as PHP 59.36 against the greenback.

Dollars traded increased to USD 999.22 million from USD 887.3 million on Monday.

“The dollar-peso closed higher mainly due to geopolitical concerns after Trump said that any country that does business with Iran will get a 25% tariff,” a trader said in a phone interview.

The peso was also dragged by a weaker yen after signals from the camp of Japanese Prime Minister Sanae Takaichi on a possible snap election next month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Wednesday, the trader said the peso could weaken further and even test the PHP 59.50 level as heightening geopolitical tensions may lead to safe-haven demand for the greenback.

For Wednesday, the trader expects the peso to move between PHP 59.10 and PHP 59.50 per dollar, while Mr. Ricafort sees it ranging from PHP 59.20 to PHP 59.40. — Aaron Michael C. Sy