Peso weakens in anticipation of SDA cut

The peso weakened on Thursday as investors shied away from Philippine investments in anticipation of Bangko Sentral ng Pilipinas's cut on Special Deposit Account rates. The Philippine unit shed 4.5 centavos to end Thursday at 40.63=$1 compared to 40.585=$1 close on Wednesday. Some $709.5 million changed hands on Thursday, slightly down from the $814.7 million volume a day previous. "Investors opted out of Philippine SDAs in anticipation of a cut in its rates. The flight of capital has caused the peso's relative weakness," a trader said. On Thursday, the BSP kept policy rates on hold at record lows of 3.5 percent for overnight borrowing and 5.5 percent for overnight lending. It, however, cut SDA rates by 50 basis points to 2.5 percent across all tenors. Last January, monetary authorities rationalized SDA rates to 3.0 percent from a price that was at a premium over policy rates. The SDA is a facility of the central bank used to mop up liquidity in the financial system. The trade sees the peso moving within the 40.55 to 40.70 levels on Friday. — BM, GMA News