Peso closes at record low of 56.43 to dollar

The peso dropped to a new all-time low yesterday, closing at 56.43 to the dollar as market sentiment deteriorated further over political uncertainties and the government’s declining ability to handle its mounting debt burden.

The local currency opened weak at 56.37 and by mid-trade, it was down to 56.435 to the dollar due to the combined effects of a strong dollar and worries over the unfolding political scenario. Yesterday’s closing rate was weaker than the record closing low of 56.425 last touched on March 26.

According to the Philippine Dealing System (PDS), the latest closing rate was only two centavos away from the record intra-day low of 56.45 to the dollar which was recorded on March 22.

Currency traders said the drum beating for public support by the opposition was causing more and more jitters in the market, expecting a build up that could lead to widespread protests over the next few weeks.

Traders said that even if the political system was fundamentally stable, the perception of instability was more damning on the sentiment-driven currency market.

The Bangko Sentral ng Pilipinas (BSP) said part of the market pressure on the peso was in part due to giant oil companies’ strong demand for dollars as well as from airlines that needed to import jet fuel.

BSP Deputy Governor Amando Tetangco Jr said the combined effects of a strong dollar and higher demand created a downward pressure on the peso.

Tetangco also admitted that market sentiment was still negative as the canvassing of the votes from the May elections dragged on with no end in sight.

"The market is still cautious because of political concerns," Tetangco said.