Peso pierces 54:$1 level

MANILA, Philippines — The peso pierced the 54 to $1 resistance level yesterday despite heavy intervention by the Bangko Sentral ng Pilipinas (BSP) in the foreign exchange market to smoothen the volatility of the local currency.

The peso, the third weakest currency in the world, lost 19 centavos to close at 54.13 yesterday from Tuesday’s 53.94 to $1. This was the lowest level for the peso since closing at 54.155 to $1 on Dec. 2, 2005.

It opened stronger at 53.9 and appreciated to hit an intraday high of 53.89 during morning trade but lost steam to hit an intraday low of 54.14 toward the end of the trading session.

Traders said the BSP was active in the market as volume jumped by 78 percent to $772.5 million from $434.1 million last Tuesday.

Metropolitan Bank & Trust Co. (Metrobank) said in a report the peso may further test the 54.19 to 54.23 level after it breached the 53.8 to 54 range.

“Keep positions light for the time being, however bias is still to pick up dollars on dips ahead of expected corporate demand this week. Remain wary of possible agent supply at 54 in the near term,” Metrobank said.

It added President Duterte failed to address major economic concerns such as the rising inflation as well as the continued weakening of the peso against the dollar during a tete-a-tete last Wednesday.

“Markets may digest any possible impact of Pres. Duterte’s televised interview which started near market close while waiting for clearer signals from BSP,” Metrobank said.

Calls for an aggressive monetary action from the BSP’s continued to mount as inflation is expected to remain elevated for the rest of the year.

“Expect players to remain wary of holding long -dated securities in the near term as the 10-year auction was poorly received,” it said.

The central bank has so far raised interest rates by 100 basis points to curb rising inflationary expectations due to higher oil and food prices, weak peso, and the impact of the tax reform law.

Inflation kicked up to a nine-year high of 6.4 percent in August from 5.7 percent in July, bringing the average to 4.8 percent from January to August and exceeding the central bank’s two to four percent target.