Peso weakens further on dollar demand

THE PESO dropped on Tuesday on increased demand for the dollar before the holidays.

The local unit closed at P58.85 per dollar, declining by 12 centavos from its P58.73 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Monday’s session slightly stronger at P58.70 against the dollar. Its intraday best stood at P58.655, while it dropped to as low as P58.88 versus the greenback.

Dollars exchanged climbed to $1.14 billion on Tuesday from $869.5 million on Monday.

“The peso closed higher. It was usually trading in a tight range,” a trader said in a phone interview. “Maybe because ahead of the holidays, there was some dollar demand ahead of the holiday.”

Bargain hunting by those with dollar requirements offset the support provided by holiday remittances, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The trader added that the November fiscal performance data released on Tuesday may have also affected market sentiment.

The government’s budget deficit narrowed by 55.4% year on year to P157.6 billion in November from P213 billion, the Bureau of the Treasury said. This was a reversal from the P11.2-billion surplus posted in October.

Philippine financial markets are closed on Dec. 24-25 for the Christmas holidays.

Meanwhile, the dollar index, which measures the US currency against six rivals, slid 0.2% to 98.061 on Tuesday, extending losses into a second day after dropping 0.5% on Monday, Reuters reported.

Investor focus was on US gross domestic product data due later on Tuesday. The data will likely confirm what economists call a K-shaped economy in which higher-income households are doing well, while middle- and lower-income are barely staying afloat. — Katherine K. Chan