Peso drops further on recession jitters

THE PESO weakened further on Wednesday as investors flocked to the safe-haven dollar amid recession fears.

The local currency closed at PHP 55.91 versus the greenback on Wednesday, down by 12 centavos from Tuesday’s close of PHP 55.79, data from the Bankers Association of the Philippines showed.

The peso opened Wednesday’s trading session sharply weaker at PHP 55.95 per dollar. Its worst showing was at PHP 56.145, while its intraday best was at PHP 55.895 against the greenback.

Dollars traded rose to USD 1.273 billion from USD 853.65 million on Tuesday.

A trader said in an e-mail that the peso weakened against the dollar due to fears of a recession this year.

“The peso weakened further due to safe-haven demand amid escalating market concerns of a potential global recession in 2023,” the trader said.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso declined after the dollar corrected slightly against major global currencies.

The dollar index, which measures the greenback against six other currencies, fell 0.74% after rising 1% overnight in a sign of investors’ uncertainty about the path forward for rates, Reuters reported.

The trader said the peso may continue to depreciate against the dollar on Thursday due to the release of December inflation data.

A BusinessWorld poll of 11 analysts yielded a median estimate of 8.3% for December inflation, within the 7.8% to 8.6% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month.

If realized, December would be the ninth straight month that inflation surpassed the BSP’s 2-4% target for 2022.

The trader sees the peso moving between PHP 55.80 and PHP 56.05 on Thursday, while Mr. Ricafort gave a slightly narrower forecast range of PHP 55.80 to PHP 56 per dollar. — AMCS