Philippine peso sinks to its weakest level in nearly 12 years

The peso plunged to its worst showing against the dollar in nearly 12 years on Monday, as US Treasury yields continued to rise.

The local currency depreciated by 13.5 centavos to close at P52.465:$1 from P52.33 on Friday. This is the weakest since the peso closed at P52.745:$1 on July 19, 2006.

“With 10-year US Treasury yields now breaching 3.1 percent and oil prices continue to go higher, we see pressure to depreciate,” said Benedict Chan, treasurer and head of the Treasury Group at China Bank.

According to a report by Reuters, the yield on US 10-year Treasuries rose by 1.5 basis points to 3.082 percent, nearing the seven-year high of 3.128 percent which was hit Friday last week.

“In the currency market, higher US yields helped to strengthen the dollar against a wide range of currencies," the report read.

Meanwhile, US crude futures rose 0.6 percent to $71.69 per barrel, close to last week’s 3 1/2-year high of $72.30 per barrel.

Brent crude futures likewise increased 0.6 percent to $78.95 per barrel after rising to $80.50 last week, the highest since November 2014.

Chan noted investors are closely monitoring the minutes of the latest policy meeting of the US Federal Reserve to be released on Wednesday.

“I think it’s pressure because of the flows, plus generally with the fact that US interest rates continue to grind higher,” he said. —VDS, GMA News