Peso flirts with 54:$1 anew

The Philippine peso depreciated further against the dollar as it flirted with the 54-to-$1 level weighed by concerns about the US-China trade war and the wider trade gap in July.

The local currency shed 6 centavos to close near a 13-year low of P53.94:$1, from 53.88 on Monday. The last time the peso touched 54-to-a dollar level was on December 2, 2005 at 54.155.

The local currency hit an intra-day low of P53.975:$1, or 2.5 centavos short of P54, on Friday, September 7, as investors worry about the US-China trade war and the Philippines’ nine-year high inflation.

“Trend is still toward weakness. There is still lingering cautiousness with the escalation of the US-China trade war,” Union Bank of the Philippines chief economist Ruben Carlo Asuncion said.

Last week, US President Donald Trump warned that he was ready to levy additional taxes on practically all Chinese imports with China cautioning it will respond if the United States takes any new steps on trade.

“The trade deficit also did not help to shore up the peso,” Asuncion noted.

The country’s trade deficit swelled by 171.7 percent to $3.55 billion in July 2018, from a gap of $1.31 billion a year earlier, as imports of construction materials soared in relation to the government’s infrastructure program. —VDS, GMA News