MANILA, Philippines - The peso retreated yesterday back to the 45 to $1 level on the back of weaker currencies across the region due to doubts on the viability of the $144-billion economic bailout for Greece as well as pre-election jitters in the local front.
The currency opened weaker at 44.82 to $1 before depreciating further to an intra-day low of 45.04 to $1. The peso shed 37 centavos to close at 45.010 to the dollar from Tuesday’s close of 44.640 to $1. A total of $1.103 billion changed hands yesterday at the Philippine Dealing and Exchange Corp. or slightly higher than Tuesday’s volume of $722.8 million.
Currency traders said the peso continued to lose steam against the dollar due to concerns about the May 10 elections.
RCBC senior vice president Marcelo Ayes said investors were spooked by the malfunctioning of the precinct count optical scan (PCOS) machines tested in various areas including Makati, Muntinlupa, Pateros, Batangas, and Mindoro that was traced to the compact flash (CF) cards used to store data inside the voting machines.
“Yes the political risk is now elevated due to unforeseen glitches in the PCOS flash card. Hopefully it will be resolved before May 10,” Ayes stressed.
Ayes also traced the weakening of the regional currencies against the greenback to the bailout plan of Greece and the plan of China to raise its reserves.
“Be it as it may investors’ reduced risk more as an offshoot of Greece contagion effect and China’s move to raise reserve, slow down loan growth, and resulting in lower manufacturing data,” he said.
According to him, the factors led to the overnight sell off in stocks and other risk assets across the globe wherein the global stock market lost $1.1 trillion.
“While the world got hit by that double whammy, we are hit by a third political risk,” Ayes lamented.