THE PESO depreciated on Monday, returning to the P51-per-dollar mark, due to strong demand for the dollar and amid expectations of better US manufacturing data.
The local unit finished trading at P51.08 versus the greenback on Monday, weakening by 27 centavos from the P50.81 per dollar close on Friday, according to data from the Bankers Association of the Philippines’ website.
The peso opened at P50.85 against the dollar. It closed at its weakest point for the day, while its intraday best was at P50.79-to-a-dollar.
Dollars traded on Monday declined to $1 billion from the $1.108 billion seen during the Friday session.
Traders attributed the local unit’s depreciation to a surge in dollar demand as well as market expectations of a rebound in economic data from the US.
“Dollar demand came in the afternoon. We see this [weaker peso] as a technical move kasi walang (because there are no) macro-level factors,” one trader said in a phone call.
“The local currency weakened significantly above the P51 level as the market positioned towards the greenback in anticipation of a likely strong rebound in US manufacturing report for November 2019 due to be released tonight,” another trader said in an e-mail.
Bloomberg reported that the US manufacturing sector saw a modest improvement in October, buoyed by the fast expansion in output and new business.
The report noted that the seasonally adjusted IHS Markit final US manufacturing Purchasing Managers’ Index (PMI) grew at 51.3 in October from 51.1 in September.
This was supported by firms that noted their clients were showing less hesitancy in placing orders and market conditions had improved. Moreover, foreign demand also picked up after three successive monthly contractions in new export orders.
For today, the first trader expects that the local unit will trade from P50.80-51.20 against the dollar, while the second trader sees a range of P51.00-P51.20.
Meanwhile, emerging Asian currencies likewise weakened against the dollar on Monday, as uncertainty around an initial Sino-US trade deal offset upbeat economic data from China.
Caution pervaded in markets, with a deadline on an imposition of additional 15% tariffs on Chinese products by the US just two weeks away, and Beijing demanding scrapping of existing tariffs as part of the trade deal. — L.W.T. Noble with Bloomberg and Reuters