Peso drops on market caution after Biden decision

The peso declined against the dollar on Monday as market players chose to stay cautious after US President Joseph R. Biden, Jr. withdrew from his re-election campaign.

The local unit closed at PHP 58.38 per dollar on Monday, weakening by 4.5 centavos from its PHP 58.335 finish on Friday, Bankers Association of the Philippines data showed.

The peso opened Monday’s session weaker at PHP 58.40 against the dollar. Its intraday best was at PHP 58.375, while its worst showing was at PHP 58.48 versus the greenback.

Dollars exchanged went down to USD 858.75 million on Monday from USD 979.27 million on Friday.

“The dollar-peso traded relatively sideways on market caution amid US political noise and ahead of US GDP (gross domestic product) data this week,” a trader said by phone.

The dollar was broadly steady on Monday after Mr. Biden dropped his re-election bid, increasing former President Donald J. Trump’s chances of another term, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar eased slightly against a basket of currencies on Monday as investors focused on Mr. Biden’s decision to end his re-election campaign and the next moves from the US Federal Reserve and the Bank of Japan, Reuters reported.

The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — fell 0.1% at 104.30.

Mr. Biden announced he was exiting the race on Sunday and endorsed Vice-President Kamala Harris to replace him as the Democratic candidate in the November election. Ms. Harris quickly received the backing of many within the party, but several high-profile names stayed quiet.

Mr. Trump, the Republican nominee, sits well ahead in betting markets following Mr. Biden’s disastrous debate performance last month and questions about his age and health.

Cautious signals from Federal Reserve Bank of San Francisco President Mary Daly last week also lifted the dollar, Mr. Ricafort said. Ms. Daly said on Thursday she is looking for more confidence that inflation is moving back to the Fed’s 2% target before calling for an interest rate cut.

For Tuesday, Mr. Ricafort sees the peso ranging from PHP 58.30 to PHP 58.50 per dollar, while the trader expects it to move between PHP 58.20 and PHP 58.50. — A.M.C. Sy with Reuters