Philippine peso trades weaker as global uncertainty lifts dollar

The perception that US trade talks with China are doomed to fail gave the dollar a boost Friday on the Philippine Dealing System—the foreign exchange trading center.

The peso lost 0.06 centavos to close the session at P52.33:$1 from 52.27 Thursday.

“Movements today were influenced b y comments from US officials that trade talks with China are unlikely to succeed,” said Guian Angelo Dumalagan, market economist at Land Bank of the Philippines.

“There was also data from Japan showing weak inflation. These two latest developments, along with continued expectations of more US rate hikes ahead, contributed to the peso’s weakness.” he said.

“The US dollar usually benefits from global uncertainty due to its safe haven status,” Dumalagan noted.

Apart from the US-China trade issues and weak price movements in Japan, US bond yields are also giving the dollar an added boost.

The peso-US dollar pair is trading near 12-year higher after the 10-year US government bond yield reached near seven-year highs and breached 3.10 percent, said Michael Ricafort, head of economics at Rizal Commercial Banking Corp.

The foreign exchange market must also contend with wider Philippine balance of payments deficit and wider trade deficit, while the shares on the Philippine Stock Exchange are trading at one-year lows, Ricafort noted.

Even if the domestic factors are not directly influencing the exchange rate, they impact on the market psychology, Dumalagan noted.

“They do affect market sentiment temporarily,” he said. —VDS, GMA News