Peso continues to tumble

Asian currencies including the peso extended their losses against a broadly stronger dollar yesterday, prompting central banks in Thailand, Malaysia, Indonesia, India and the Philippines to defend their struggling currencies.

At yesterday’s trading at the Philippine Dealing System (PDS), the peso weakened by another 31 centavos to settle at 46.60 from Monday’s close of 46.290 to $1.

Traders said the Bangko Sentral ng Pilipinas (BSP) was selling dollars in the currency market to try to support the weakening peso. Yesterday’s trading volume hit $1.212 billion, the biggest so far this year.

The dollar hit a 10-month high against a basket of major currencies, boosted by a sharp drop in oil prices on expectations that hurricane Gustav’s damage to US energy facilities may be smaller than feared.

Such dollar-selling intervention, which has become routine in recent months, helped the peso stabilize at 46.60 per dollar, its weakest level in almost a year.

“The market is definitely and decisively for the dollar, so there is nothing they (central bank) can do, but they are still intervening just like all the other central banks,” the trader said.

The dollar’s rally also weighed on other Asian currencies, with the Thai baht falling to its lowest level in 12 months at 34.49 to $1. Thailand’s deepening political turmoil put additional pressure on the baht.