Peso continues to depreciate vs dollar

The peso continued to depreciate against the dollar on Tuesday to log a new two-month low, with market sentiment remaining negative due to concerns over corruption involving state infrastructure projects and a potential US government shutdown.

The local unit dropped by 5.1 centavos to close at PHP 58.196 versus the greenback from its PHP 58.145 finish on Monday, Bankers Association of the Philippines data showed.

This was its weakest close in two months or since its PHP 58.32-per-dollar finish on July 31.

The peso opened Tuesday’s session stronger at PHP 58.05 versus the dollar. It climbed to a high of PHP 58.03, while its worst showing was at PHP 58.37 against the greenback.

Dollars exchanged increased to USD 1.69 billion on Tuesday from USD 1.47 billion on Monday.

“The dollar-peso remained relatively weak due to the ongoing investigation on alleged corruption in the Philippine government,” the first trader said in a phone interview.

The government is currently investigating alleged corruption in state infrastructure projects, with some lawmakers and Public Works department officials being accused of receiving payoffs.

“The peso continued to weaken on market concerns from the looming US government shutdown as Republican and Democrat congressmen still failed to reach a budget bill,” the second trader said in an e-mail.

For Wednesday, the first trader expects the peso to move between PHP 57.90 and PHP 58.30 per dollar, while the second trader said it could range PHP 58.10 to PHP 58.35.

The US dollar held steady on Tuesday ahead of a possible US government shutdown that could disrupt the release of the monthly jobs report this week, Reuters reported.

Government funding was set to expire at midnight on Tuesday (0400 GMT) unless Republicans and Democrats agree to a last-minute temporary spending deal.

The dollar index, which has already fallen nearly 10% this year, was last down 0.1% on the day at 97.785. — A.M.C. Sy with Reuters