Peso slips as BoJ stance drags yen to fresh lows

THE PESO edged lower on Monday as the dollar was stronger against the yen and most regional currencies amid the Bank of Japan’s (BoJ) cautious stance.

The local unit closed at P58.73 versus the dollar, slipping by three centavos from its P58.70 finish on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session flat at P58.70 against the dollar. Its intraday best was at P58.63, while its worst showing was at P58.75 against the greenback.

Dollars exchanged fell to $869.5 million on Monday from $1.38 billion on Friday.

“The peso weakened as the latest rate hike from the Bank of Japan likewise supported the dollar’s strength,” a trader said in an e-mail.

The yen languished near record lows to the euro and Swiss franc on Monday as the lack of hawkish signals from the Bank of Japan emboldened traders, even as Japanese officials stepped up warnings about currency intervention, Reuters reported.

The Japanese currency also loitered near an 11-month trough against the US dollar and was just shy of a 17-month low on the Aussie.

On Friday, the central bank raised the policy rate by a quarter point to a three-decade peak of 0.75%, in a clearly telegraphed move. But while the accompanying statement signaled a readiness to continue tightening policy, BoJ Governor Kazuo Ueda stuck to his usual cautious rhetoric in his news conference.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso weakened slightly on Monday after the country’s balance of payments (BoP) position posted a deficit in November, breaking a three-month streak of surpluses.

The Philippines’ BoP deficit sharply narrowed to $225 million in November from the $2.276-billion gap recorded a year ago, central bank data showed. This was a reversal from the $706-million surplus seen in October.

For Tuesday, the trader sees the peso moving between P58.55 and P58.80 per dollar, while Mr. Ricafort expects it to range from P58.60 to P58.85. — Katherine K. Chan with Reuters