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Friday, March 29, 2024

Peso depreciates to 17-year low of 55.09 to a dollar

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The peso fell again Friday to post a nearly 17-year low against the US dollar following signals from the US Federal Reserve of more and aggressive rate hikes in the coming months.

The peso closed at 55.09 against the dollar, down from 54.975 on Thursday. It opened at 54.98 and registered its weakest level for the day at 55.31. Total volume turnover reached $1.292 billion, up from $1.248 billion on Thursday.

Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said in an emailed reply to Manila Standard query that it was the local currency’s weakest level in nearly 17 years or since Oct. 25, 2005 when it settled at 55.26 against the greenback.

Ricafort attributed the peso’s weakness to “higher US dollar vs major global currencies recently amid hawkish signals from Fed officials.”

“[The] market sentiment [was] also partly weighed by softer net foreign portfolio investments/hot money data and manufacturing PMI data,” Ricafort said.

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“For the week, the peso weakened by 0.105 or 0.2 percent [narrower vs last week’s peso weakness of 1.235 or 0.2 percent], thereby could already signal some stabilization in the foreign exchange rate movements,” Ricafort said.

He said that since the start of 2022, the peso exchange rate weakened by a total of P4.091 or 8 percent from the end-2021 closing rate of 50.999.

The Bangko Sentral ng Pilipinas reported on Friday that foreign portfolio investments or hot money posted a net outflow of $270 million in May, a reversal of the $416.7-million net inflow a year ago and $1.4-billion net inflow in April amid the uncertain global environment.

It said the net outflow in May resulted from the $1.2-billion gross outflows and $966-million gross inflows for the month.
“The $966 million registered investments for May 2022 reflected a decrease of 55.7 percent [or by $1.2 billion] compared to the $2.2 billion recorded in April 2022,” the BSP said.

Majority of investments or 80.1 percent registered were in Philippine Stock Exchange-listed securities (investments mainly in information technology; banks; property; holding firms; and telecommunications], while the remaining went to investments in peso government securities (18.3 percent) and other portfolio investments (1.7 percent).

Cumulative transactions from Jan. 1 to May 31 yielded a net inflow of $1.1 billion, a reversal of the $441-million net outflow in the same period last year.

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