Currencies 2 MIN READ

Peso drops to near one-month low

December 28, 2022By Business World

THE PESO declined to a near one-month low on Wednesday, returning to the PHP 56 level against the dollar, on less need for cash as the holiday season nears its end.

The local currency closed at PHP 56.20 versus the greenback, down by 30 centavos from Tuesday’s PHP 55.90 close, data from the Bankers Association of the Philippines showed.

This was the peso’s worst finish in almost a month or since it closed at PHP 56.22 against the dollar on Dec. 1.

The peso opened Wednesday’s trading session at PHP 55.90 per dollar, steady from its Tuesday close. Its intraday best was at just PHP 55.89, while its weakest showing was at PHP 56.30 against the greenback.

Dollars traded rose to USD 882.85 million from USD 813.27 million on Tuesday.

The peso dropped against the dollar “after the long Christmas holiday weekend and after the likely culmination and eventually tail-end of the holiday-related spending, though there may still be another round of increased holiday-related spending, though by a lesser extent, in preparation for the upcoming long New Year holiday weekend,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The seasonal peak in Christmas holiday spending and the conversion of overseas Filipino workers’ remittances to pesos could have already happened shortly before Christmas, though there may still be some holiday-related spending … before the New Year celebrations,” Mr. Ricafort said.

He said importers could have also taken advantage of the stronger peso recently to secure their dollar requirements, “especially anticipating any near-term bottom to maximize the bargain-hunting opportunity shortly before the Christmas holiday spending rush.”

Meanwhile, a trader said in a Viber message that the peso declined as the dollar was stronger against most currencies on Wednesday.

The dollar climbed to a more than one-week high versus the yen on Wednesday, on higher Treasury yields amid hopes for a strong rebound in China amid eased coronavirus curbs.

“Corporate demand also outweighed the dwindling seasonal inflows. Some covering of short peso-dollar trading positions was a factor as well,” the trader added.

For Thursday, Mr. Ricafort sees the peso moving between PHP 56.10 and PHP 56.35 against the dollar, while the trader gave a wider forecast range of PHP 55.50 to PHP 56.50 amid volatile trading. — AMCS

This article originally appeared on bworldonline.com

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