Peso sinks to fresh 19-month low

The Philippine peso weakened against the dollar on the first trading day of the week to carve a fresh 19-month low after strengthening for the past two consecutive days, as the greenback was buoyed by stronger-than-expected economic data in the US.

The local unit lost 27 centavos to close at P58.79:$1 from last Friday’s finish of P58.52:$1.

This is the weakest performance in over 19 months since November 3, 2022’s finish of P58.80:$1,  surpassing the previous 19-month low of P58.78:$1 hit on June 5, 2024.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed Monday’s depreciation to the stronger-than-expected labor data in the United States, which drove Treasury yields higher, and reduced odds of a rate cut by the Federal Reserve later in 2024.

The United States on Friday reported a 272,000 increase in nonfarm payroll for the month of May, higher than anticipated which likely lowers down the chances of the Federal Reserve easing policy rates.

“The US dollar/peso exchange rate also went up after the latest FDI (foreign direct investments) data declined to five-month lows,” Ricafort said, as net inflows stood at $686 million in March, the lowest since October 2023’s $670 million.

According to BSP governor Eli Remolona Jr., the central bank intervenes in the foreign exchange market when it is “under stress” or when it finds some “dysfunction in the market.”

BSP senior assistant governor Iluminada Sicat last week said the recent weakness of the peso is only temporary, as the greenback is buoyed by developments overseas.

Ricafort also cited the increase in the ratio of banks’ soured loans to an 11-month high of 4.45%, along with the latest downward correction in the Philippine Stock Exchange (PSE).

The bellwether PSEi shed 60.12 points or 0.92% to 6,458.64, while the broader All Shares index lost 24.69 points or 0.71% to 3,467.24.

More than 282.363 million shares, valued at P2.997 billion, changed hands. Decliners led advancers, 109 to 58, while 66 issues were unchanged.

“The PSEi plunged in today’s session, driven by stronger-than-expected US jobs data from last week, which bolstered the belief that the Fed won’t be slashing rates any time soon,” Regina Capital Development Corp. head of sales Luis Limlingan said in a separate mobile message.

“Additionally, investors are gearing up for the upcoming US inflation data release this week, with analysts anticipating that US inflation will likely remain steady quarter on quarter,” he added. — RSJ, GMA Integrated News