Peso slips on war fears, data

The peso declined slightly on Tuesday as fresh tensions in the Middle East boosted demand for the safe-haven dollar, and as the market weighed weak economic data.

The currency depreciated by four centavos to end at PHP 62.80 versus the greenback from its PHP 62.76 finish on Monday, Bankers Association of the Philippines data showed.

The local unit opened the session nearly flat at PHP 62.75 per dollar. It climbed to a high of PHP 62.70, while its intraday low was PHP 62.869 against the greenback.

Dollars traded inched down to USD 1.022 billion from USD 1.056 billion.

The peso edged down amid renewed tensions in the Middle East, with markets also waiting for the release of key US inflation data for leads on the US Federal Reserve’s next move, a trader said by phone.

The currency was also dragged lower by data showing a decline in Philippine foreign direct investment (FDI) inflows, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Net inflows of FDI dropped by 44.1% year on year to USD 689 million in July from USD 1.233 billion a year ago, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Still, this was the highest inflow in six months or since the USD 799 million in January, but marked the first annual decline since April.

For the first seven months, net inflows of foreign direct investments went down by 23.9% year on year to USD 4.071 billion from USD 5.35 billion.

Net FDI inflows are expected to reach USD 6.5 billion this year, according to the BSP’s latest projections.

For Wednesday, the trader said the peso could stay rangebound and move between PHP 62.60 and PHP 62.90 per dollar as players await US data, while Mr. Ricafort said it could range from PHP 62.70 to PHP 62.90. — Aaron Michael C. Sy