Peso plunges to 2-year low vs US$ on strong US data
Global uncertainties, safe-haven demand for greenback sends peso further down
MANILA: The Philippine peso weakened further versus the US dollar on Monday (March 7, 2022), on continued global uncertainties and safe-haven demand for the greenback.
Latest data from Trading Economics, using mid-market data, show that the peso has further declined to 52.08 against the US greenback at 10.34 am local time (2.24 am UTC).
Data from the Bangko Sentral ng Pilipinas (BSP) showed the peso at 51.696 at 10.38am, depreciating by 22 centavos from its P51.470 close on March 4. The BSP buying rate was at 51.5 on Monday, while selling rate was 52 for every dollar.
As the escalating war in Ukraine propped up the US currency, the peso fell down to its weakest since March 2020. It has declined more than 2% so far this year, making it one of the worst performers in Asia.
Analysts say Russia’s action in Ukraine has left the 10-member states of the Association of Southeast Asian Nations nervous about the implications for the South China Sea dispute.
Overall, the US currency rose on Monday against a basket of currencies on safe-haven demand.
Traders said the demand for the US greenback also spiked on Fed rate hike expectations following robust US labour market data.
Philippine stocks opened lower with the PSE Composite Index down 169.65 points or 2.31% lower as of 10.26 am on Monday.
With equities sharply lower, significant us dollar demand being seen once again, and another week of unpredictable geopolitical risk.
US jobs data
US job growth surged in February, according to latest data, bolstering hopes the economy could withstand challenges from geopolitical tensions, inflation and tighter monetary policy.
A key theme for monetary policy outlook between global central banks continues to be Russia’s military action in Ukraine.
Most analysts have expected the Philippine currency to weaken further to 52 to $1 in 2022.
Meanwhile, the peso stood at 13.98 against the UAE dirham, or Dh71.53 per. For more on gold and foreign exchange rates, click here.
The ICE US Dollar index, which tracks the currency against a basket of others, surged as high as 98.92 this past week, its highest level since May 2020. It finished the week with a 2.1% jump, one of the largest in the past five years.
The US Federal Reserve on Tuesday said manufacturing output expanded by 1.2% in October, the fastest pace since March 2019 and a turnaround from the 0.7% decline in September. It is also better than the 0.7% growth estimate of economists polled by Reuters.