The peso weakened further to hit a new 10-year low against the US dollar Monday, amid uncertainties posed by the imminent policy adjustments by the US Federal Reserve.
The local currency closed at 50.27 a greenback Monday, down from 50.215 a dollar Friday. It was the local currency’s weakest level in more than 10 years, or since it settled at 50.32 a dollar on Sept. 26, 2006. Some $366.6 million changed hands Monday, lower than $415.3 million on the previous trading day.
Security Bank said in a report the US dollar would continue to be strong against other currencies. “The market will keep an eye on Trump’s first joint speech to Congress where we will have an idea on the administration’s tax plan,” Security Bank said.
“We still, however, have a bias towards a higher US dollar with support stronger than resistance. Theoretically, the US dollar should be stronger on fundamentals and potential for wider rate differentials,” the bank said.
ING Bank Manila senior economist Joey Cuyegkeng said the peso’s underperformance over the past several days could also be a result of local factors. “The premium of PHP to the index of Asian currencies [ex-Japan yen] has actually widened to as high as 5ppt. We attribute this to local political uncertainties, especially in the last couple of weeks. This set of political developments leading to intensified political noise result in cautious views tending to favor US dollar rather than the peso,” Cuyegkeng said.