Peso falls to near 12-year low anew

The Philippine peso depreciated on Monday to plumb near a 12-year low anew, as the market flocked to safe-haven assets such as the dollar—a result of global developments.

The local currency closed at P52.95:$1, weaker by 25 centavos from P52.70 on Friday.

This is the weakest performance of the peso since it closed at P52.98:$1 on July 3, 2006.

“The depreciation of the peso is because of safe-haven buying following the recent G7 summit and ahead of the June 12 meeting between the US and North Korea,” Guian Angelo Dumalagan, market economist at Land Bank of the Philippines, said.

Over the weekend, US President Donald Trump backed out of a joint communiqué with the G7 summit and dented the group’s efforts at putting on a united front.

“Trump’s reversal, announced while he was en route to Singapore for a meeting with North Korean leader Kim Jong Un, sent his Group of Seven partners scrambling,” according to a Reuters report.

Market expectations of an interest rate increase in the US gave the dollar an added boost, Dumalagan said.

The Federal Reserve is widely expected to hike rates during its policy meeting on June 12 and 13.

Bank of the Philippine Islands (BPI) lead economist Emilio Neri Jr. noted a combination of overseas concerns and economic data released last week.

“We think it’s due to the combined impact of external uncertainties (e.g. G7 summit and trade war concerns) and rapid widening of the Philippine trade gap,” he said in a separate text message.

The Philippine Statistics Authority has reported that the trade deficit widened by more than 130 percent in April as imports registered a double-digit growth while exports declined.

“The dollar also received some boost from expectations of another rate hike from the US Federal Reserve this week,” Dumalagan said.

In a press conference earlier on Monday, Budget Secretary Benjamin Diokno the peso has been depreciating as a result of a firmer dollar.

“The peso fluctuates. It’s more of the strengthening of the dollar rather than the weakening of the peso,” he told reporters in Manila City. —VDS, GMA News