Peso ends higher after touching new low intraday

The peso edged higher against the dollar on Monday despite hitting a new record low intraday as the Middle East conflict continued to worsen.

The currency inched up by 0.4 centavo to close at PHP 62.586 versus the greenback from Friday’s record-low finish of PHP 62.59, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Monday’s session weaker at PHP 62.62 per dollar, while its intraday best was at PHP 62.58.

Meanwhile, its worst showing was at PHP 62.775, marking a new historic low for the peso against the dollar as this surpassed the previous intraday record of PHP 62.69 logged on Sept. 2.

Dollars traded declined to USD 1.189 billion from USD 1.521 billion previously.

“The peso’s record intraday low was largely driven by continued US dollar strength, elevated US yields, and persistent concerns over higher oil prices and global uncertainty, which have kept demand for dollars elevated,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

Still, it recovered before the session closed, which could have been due to profit taking and resistance to further weakness at current levels, he said.

The market also digested better-than-expected US nonfarm payrolls data over the weekend that bolstered US Federal Reserve rate hike bets despite President Donald J. Trump’s latest call for rate cuts, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He said the peso tracked the dollar’s sideways movement on Monday amid less hawkish signals from Fed Chair Kevin Warsh.

The dollar wobbled on Monday despite a ramp-up in US rate-hike bets, as tension in the Middle East heightened inflation risks that could force global central banks to tighten policy in tandem, eroding the US yield advantage, Reuters reported.

Moves in currencies were largely subdued in Asia trade with US markets closed for a holiday, though the dollar struggled to sustain a brief lift it received from Friday’s blowout US jobs report.

Traders moved to price in a roughly 57% chance the Federal Reserve will hike rates this month in the wake of the nonfarm payrolls release, with much now depending on Friday’s inflation data.

For Tuesday, Mr. Ricafort expects the peso to range from PHP 62.45 to PHP 62.70 against the greenback.

Mr. Asuncion said the peso’s movement will continue to be heavily influenced by global factors, particularly US rate expectations, Treasury yields, and energy prices. — Aaron Michael C. Sy with Reuters