Peso weakens further vs dollar

The peso declined to a fresh eight-month low against the dollar on Tuesday as the safe-haven greenback remained strong due to concerns over the Chinese economy.

The local currency closed at PHP 56.84 versus the dollar on Tuesday, down by six centavos from Monday’s PHP 56.78 finish, data from the Bankers Association of the Philippines’ website showed.

This was the peso’s weakest close in over eight months or since its PHP 56.94 per dollar finish on Nov. 23, 2022.

The local unit opened Tuesday’s session slightly stronger at PHP 56.65 per dollar. Its intraday best was at PHP 56.60, while its weakest showing was at P56.865 against the greenback.

Dollars traded dropped to USD 1.09 billion on Tuesday from USD 1.41 billion on Monday.

The peso declined as the dollar remained among one-month highs, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.

The safe-haven dollar stayed firm against major peers while the yuan sank to a nine-month trough after China’s central bank unexpectedly cut key policy rates for a second time in three months on Tuesday to shore up the country’s sputtering economy, Reuters reported.

The dollar index, which measures the currency against six developed market counterparts including the euro and yen, was about flat at 103.08 after hitting a 1-1/2-month high at 103.46 on Monday, buoyed by demand for the safest assets following a spate of disappointing Chinese economic indicators that raised concerns about global growth.

Punctuating those worries, Chinese data on industrial output, retail sales and investment released shortly after the People’s Bank of China’s rate cut showed unexpected slowdowns.

“The peso depreciated ahead of a potentially upbeat US retail sales report tonight,” a trader added in an e-mail on Tuesday.

For Wednesday, the trader said the peso might continue to weaken as the market stays cautious ahead of the Bangko Sentral ng Pilipinas’ policy meeting on Thursday.

The trader expects the peso to move between PHP 56.70 and PHP 56.90 per dollar on Wednesday, while Mr. Ricafort sees it ranging from PHP 56.75 to PHP 56.95. — AMCS with Reuters