Peso sinks to three-week low vs dollar

THE PESO slumped to a three-week low against the dollar as the conflict in the Middle East continued and following dovish signals from the Bank of Japan (BoJ).

The local unit closed at P56.37 per dollar on Thursday, weakening by 19.2 centavos from its P56.178 finish on Wednesday, Bankers Association of the Philippines data showed.

This was the peso’s worst finish since its P56.385-per-dollar close on Sept. 10.

The peso opened Thursday’s session weaker at P56.30 against the dollar. Its intraday best was at P56.17, while its worst showing was at P56.40 versus the greenback.

Dollars exchanged went down to $1.73 billion on Thursday from $1.95 billion on Wednesday.

“The dollar-peso was well bid today on market risk aversion amid escalating tensions in the Middle East,” a trader said by phone on Thursday.

The dollar rose against the yen on Thursday amid cautious signals from the BoJ, which likewise caused the peso to weaken versus the greenback, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar scaled a more than six-week high versus the yen on Thursday as robustness in the US jobs market reinforced bets the Federal Reserve will not rush to cut interest rates, Reuters reported.

The yen has come under selling pressure since Japan’s new prime minister said on Wednesday, following a meeting with the central bank governor, that the country is not ready for additional rate hikes.

The safe-haven US currency saw additional demand as tensions simmered in the Middle East following Iran’s ballistic missile attack on Israel, which spurred a vow of revenge.

The dollar index, which measures the currency against the euro, yen and four other top rivals, added 0.22% to 101.88 as of 0540 GMT, a three-week peak.

The dollar added 0.14% to 146.66 yen after earlier reaching 147.25 for the first time since Aug. 20.

Dovish Bank of Japan policy maker Asahi Noguchi, who dissented against the rate hike in July, said the central bank must be patient in normalizing policy in a speech in Nagasaki.

On Wednesday, Japanese Prime Minister Shigeru Ishiba completed his backflip from perceived monetary hawk to dove, saying: “I do not believe that we are in an environment that would require us to raise interest rates further.”

For Friday, the trader sees the peso moving between P56.10 and P56.50 per dollar, while Mr. Ricafort expects it to range from P56.25 to P56.45 — AMCS with Reuters