Currencies 2 MIN READ

Peso weakens vs dollar as trade deficit widens to 5-month high in January

March 14, 2023By BusinessWorld

THE PESO weakened against the dollar on Tuesday after the country’s trade deficit reached a five-month high in January.

The local currency closed at PHP 55.08 versus the dollar on Tuesday, dropping by 15 centavos from Monday’s PHP 54.93 finish, data from the Bankers Association of the Philippines’ website showed.

The peso opened Tuesday’s session weaker from Monday’s close at PHP 55.05 per dollar. Its climbed to as high as PHP 54.88, while its worst showing for the day was at PHP 55.14 against the greenback.

Dollars traded climbed to USD 1.128 billion on Tuesday from the USD 1.075 billion recorded on Monday.

The peso weakened after the country’s trade-in goods deficit widened in January, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message on Tuesday.

The country’s trade deficit stood at USD 5.74 billion in January, wider than the USD 4.50 billion in December and the USD 4.51-billion gap in the same month last year, preliminary Philippine Statistics Authority data released on Tuesday showed.

This was the widest deficit in five months or since the USD 6.02 billion in August 2022.

The value of merchandise exports declined by 13.5% year on year to USD 5.23 billion in January.

This was the biggest drop in 32 months or since the 26.7% decline in May 2020, during the height of the coronavirus pandemic.

Meanwhile, merchandise imports grew by 3.9% year on year to USD 10.97 billion in January.

Mr. Ricafort added that the Philippine Stock Exchange index’s (PSEi) drop on Tuesday also weighed on the peso.

The PSEi declined by 151.12 points or 2.3% to end at 6,393.33 on Tuesday. The broader all shares index likewise went down by 64.35 points or 1.82% to close at 3,454.48.

For Wednesday, Mr. Ricafort expects the peso to move from PHP 54.95 to PHP 55.15 per dollar. — AMCS

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