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Peso hits P45.45, lowest in four years

Manila, Philippines – The peso depreciated to P45.45, its lowest in nearly four years, as investors scampered away from emerging markets like the Philippines and moved to safer havens on what domestic and international financial players described as a reaction to the ongoing financial upheaval in Argentina.

Philippine peso, peso, US dollar,

A worker counts U.S. dollar bills and Philippine pesos inside a money changer in Manila. The peso depreciated to P45.45 yesterday, the lowest it’s been in nearly four years, mainly because of the financial upheaval in another emerging market, Argentina. REUTERS/Romeo Ranoco

For the overseas Filipino workers (OFWs) and their beneficiaries, this means that their hard-earned dollars will go relatively a long way as their greens have more value in pesos.

The last time the peso hit this low was on Aug. 25, 2010, at a rate of P45.37 to a dollar.

The drop in the value of the peso was in tandem with the decline in the Philippine Stock Exchange Index (PSEi) with sellers dominating buyers. PSEi slid by 109.89 points to 6051.61 mark, with total of volume of 2.699 billion shares traded and valued at P6.803 billion.

As the spot currency market opened its first trading day of the week, the peso was quoted lower by eight centavos at P45.38 from Friday’s closing rate of P45.30 and sustained its drop to hit an intra-day low of P45.45, largely due to the pull out of investors from emerging markets like the Philippines. It hit an intraday high of P45.32 to a dollar.

“The investors are pulling out from emerging markets like the Philippines, including Malaysia largely because of the financial upheaval in Argentina,” a foreign banker said, virtually admitting that the “herd mentality” still exists for emerging markets wherein the Philippines, Malaysia and Argentina have been classified.

Market players noted that the monetary authorities sporadically supported the peso from further depreciating, coming in at a rate of P45.30, selling at a “very minimal amount.”

At the end of the trading day, the peso recovered and closed slightly higher at P45.37 with the weighted average rate settling at P45.404 to a dollar, a 10.3 centavos depreciation from Friday’s P45.301 with $721.90 million changing hands.

The foreign bank source predicted a “range trading” for the week with the peso moving further down to touch P45.50.

“It really will be dictated by the sentiments in Argentina,” the source said.

Reuters, on the other hand, reported that fears of a sharper slowdown in China and expectations that the US Federal Reserve will continue to trim its bond-buying program later this week have sparked a broad bout of risk aversion and a flight to safer assets such as the yen, thus affecting the peso and the Malaysian ringgit, the Indonesian rupiah, and other Asian currencies.