February 9, 2023

Filipino Guardian

Sentinels of Filipino Free Press

Peso falls as geopolitical risks fuel dollar demand

BW FILE PHOTO

The PESO ended lower on Wednesday as investors flocked to the safe-haven dollar amid rising geopolitical tensions.

The local unit closed Wednesday at 57.35 pesos against the dollar, down 14 centavos from Tuesday’s close of 57.21 pesos, data from the Bankers Association of the Philippines website showed.

The peso opened the session at P57.38 against the dollar. Its weakest finish was P57.58, while its intraday best was P57.34 against the greenback.

Dollars exchanged on Wednesday rose to $1.023 billion from $766.9 million on Tuesday.

The peso weakened on geopolitical risks, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., also said in a Viber message.

“The peso depreciated on safe-haven demand following reports of Russian missile strikes in Poland,” a trader said in an email.

A missile from an unknown source hit and killed two people in Poland, sparking global alarm that the conflict in Ukraine could spill over into neighboring countries.

Poland’s foreign ministry said the rocket fell on Przewodow, a village about four miles from the border with Ukraine, Reuters reported.

Polish President Andrzej Duda said it was “most likely a Russian-made missile” but there was no concrete evidence of who fired it.

Russia denied that its military had attacked Poland.

“The US dollar/peso also corrected slightly higher after the decline in investment commitments data; but offset by stronger vehicle sales, foreign tourist arrivals, Bureau of Customs (BoC) revenue collection data,” said Mr. Ricafort.

Total approved foreign investment fell to P13.05 billion in the third quarter from P16.82 billion in the same period last year, data from the Bureau of Statistics showed.

This was the smallest quarterly amount since P8.981 billion in investment commitments approved in the first quarter of this year. In the first nine months of 2022, approved foreign investment pledges rose 15.6% to 68.28 billion pesos.

Meanwhile, vehicle sales rose 42.4% to 32,146 units in October from 22,581 units sold in the same month last year.

Finally, on Tuesday, the BoC said it had surpassed its 2022 revenue collection target. On November 11, the bureau raised a record P745.5 billion, beating its 2022 target by 3.32%.

For Thursday, the trader said the local currency could strengthen on the back of the widely expected 75 basis points (bp) rate hike by the Bangko Sentral ng Pilipinas.

Mr. Ricafort sees the peso moving within P57.20 to P57.50 on Thursday while the trader expects it to trade between P57.25 and P57.45 against the dollar. – KB Ta-asan with Reuters