Peso at its weakest in a year

The peso closed at its weakest in nearly a year on Monday, as investors turned to dollars following better-than-expected US nonfarm payroll data. 

 

The local unit shed 54 centavos to 42.78:$1 from 42.24:$1 Friday. 

 

Monday's close was the weakest since the peso ended trades at 42.92:$1 on June 11, 2012, Reuters data showed. 

 

“The peso's close was in line with regional currencies' weakness, as the dollar strengthened on the back of the recent nonfarm payroll report,” said Nicholas Antonio Mapa, economist at the Bank of the Philippine Islands. 

 

A trader at a local bank said US data, like nonfarm payroll, serves as a sounding board—whether the Federal Reserve will downsize its $80 billion monthly bond buying stimulus. 

 

Nonfarm payroll measures US jobs in any business, excluding those employed in farms, nonprofit organizations, private households and general government. 

 

The United States created 175,000 so-called nonfarm jobs last month, according to US Labor Department data released Friday night in Manila. 

 

The data is slightly above the 170,000 forecast in a Reuters poll. 

 

While the latest data is lower than 200,000 jobs per month sought by the US government, it showed “gradual recovery” in the world's largest economy, Mapa said.

 

As a result, markets expressed “stronger sentiment for US dollar against regional currencies,” according to the trader at a local bank, noting that corporate demand also weighed on the peso.

 

“There's good demand for dollars from oil companies. This exacerbated the peso's weakness,” he said. 

 

Companies usually buy dollars near the middle or end of the month to service corporate requirements.

 

With corporate demand for the dollar still present in tomorrow's trading, the trader sees the peso moving within the 42.70 to 42.90 band on Tuesday. — VS, GMA News