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Peso sinks to near 17-month low of P57 vs US dollar

The Philippine peso continued to depreciate against its US counterpart on Tuesday to hit the P57:$1 level and mark its worst showing in nearly 17 months, as the greenback was weighed down by geopolitical tensions.

The local currency shed 19.2 centavos to close at P57:$1 from Monday’s finish of P56.808:$1. This is its worst performance since it closed at P57.375:$1 on November 22, 2022.

The latest movement comes after tensions escalated in the Middle East, as Iran launched explosive drones and fired missiles at Israel late Saturday, increasing the potential threat of a wider regional conflict.

“… The gauge of the US dollar closed at new 5.5-month highs amid geopolitical risks or increased tensions in the Middle East, after top Israeli military officials signaled possible response/retaliation to Iran’s weekend drone and missile attacks on Israel that were foiled over the weekend,” Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said in a commentary.

Ricafort also cited the better-than-expected retail sales data in the United States, which could lower the chances of the Federal Reserve to cut its rates, along with the latest hawkish signals from its officials.

The peso’s depreciation comes as the local stock barometer hit fresh four-month lows, with the Philippine Stock Exchange Index (PSEi) down 157.46 points or 2.40% to 6,404.97, while the broader All Shares index declined by 68.26 points or 1.96% to 3,409.85.

More than 15.822 billion shares, valued at P6.997 billion, changed hands. Decliners led advancers, 154 to 41, while 45 issues were unchanged.

“Philippine shares experienced the largest sell off year to date as the market touched the 6,400 level, falling 2.4%, spurred by increased yields and heightened worries over escalating tensions in the Middle East, triggered by Iran’s airstrike on Israel last Saturday,” Regina Capital Development Corp. head of sales Luis Limlingan said in a separate commentary.

The PSEi has already erased most of its gains for the year, with the benchmark down 0.7% year-to-date.—RF, GMA Integrated News