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Oct 19, 2017 @ 21:43

Peso sinks to its lowest in 11 years

 

The peso fell to an 11-year low against the US dollar on Thursday.

The local currency shed 12 centaovs and finished the day at 51.53 to $1 from 51.405 in the previous session. It is the unit’s weakest since hitting 51.60 on August 24, 2006.

A trader partly attributed it to markets’ concerns about the possible successor of Federal Reserve chair Janet Yellen – John Taylor, which reports said US President Donald Trump has a keen eye on.

Another factor cited was the Fed officials hawkish comments that boosted expectations for a December 2017 Fed rate hike.

This would increase yields on US Treasury and make the dollar stronger versus other currencies, the trader said.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo confirmed that traders were wary of “rumors about a possible hawkish Fed Chairman in John Taylor.”

“(These rumors) appeared to have spooked the market. There seems to be some nervousness in the market,” he said.

Gunigundo sad another factor was the impact of higher dollar demand by corporates for their fourth quarter import and trade requirements, he said.

Amid these negative developments, Gunigundo said the local currency’s movement “continues to be consistent with the trend.”
“It is manageable and its impact on inflation has considerably gone down,” he said.

“In short, our latitude in allowing greater flexibility in the exchange rate has widened. When the cycle reverses, we shoud see some upward shift,” he added.

For the day, the peso opened at 51.43 from 51.37 level Wednesday. It traded between its closing level and 51.38, resulting to an average of 51.46.

Some $656.7 million change hands, higher than the $497.6 million a day ago.

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