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Saturday, May 25, 2024

Peso dives to new 17-month low of 57.65 a dollar

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The Philippine peso tumbled to a new 17-month low amid concerns over widening conflict in the Middle East.

Data from the Bankers Association of the Philippines (BSP) showed that the peso lost 46 centavos to close at 57.65 against the US dollar Friday from 57.19 Thursday.  Trading volume reached $1.85 billion.

This was the lowest finish of the local currency since it settled at the 58 to 59-a-dollar levels in October and November 2022 before the Bangko Sentral ng Pilipinas intervened to prevent it from sliding to the 60 mark.

The peso’s movement followed the stock price movement, with the benchmark Philippine Stock Exchange index falling 80.19 points, or 1.23 percent, to 6,443.00, down.

Market analysts said investor sentiment turned sour on reports that Israel retaliated by carrying out airstrikes against Iran.

Asian stocks also fell across the board, with Tokyo’s Nikkei index seeing its largest decline in more than three years.

“Asian shares are falling across the board. Semiconductor shares are being sold,” said Chihiro Ota of SMBC Nikko Securities.

Tensions in the Middle East weighed on the market, after Iran’s state media reported explosions were heard in the central province of Isfahan, as the world braced for what might happen next between Israel and the Islamic republic.

“Things are still very murky. What the market hates the most is uncertainty,” Ota said.

“When things are uncertain and murky, the first reaction of the market is to reduce your position,” he added.

The US dollar also pushed higher than most currencies behind a series of comments from Federal Reserve officials, dimming hopes for imminent interest rate cuts.

Statements over the last day or so from New York Federal Reserve Bank President John Williams and Fed Governor Michelle Bowman helped lift US Treasury yields as investors bet that the Fed will cut interest rates fewer times, if at all, in 2024, than was initially expected.

Boris Kovacevic, global macro strategist at Convera, said it has become “a perfect environment for the Greenback to shine,” according to a post on X, the former Twitter.

Besides the shift in Fed policy, Kovacevic said the greenback is benefiting as a “haven” investment amid geopolitical worries and by other central banks signaling they will soon cut interest rates. With AFP

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