Peso weakens again, approaches 50 to US$1
21-NOV-2008 Intellasia | yehey.com
Nov 21, 2008 - 7:00:00 AM
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| A teller at a money changer counts a stack of Philippine peso notes in Manila November 18, 2008. (Reuters) |
The peso slid to its lowest level in two-years, nearing the 50 mark on concern a global recession will dampen demand for Philippine exports and services.
The unit closed at 49.94 against the dollar, its lowest since November 16, 2006, when it closed at 50.12, on a total transaction volume of US$498.64 million against Mondays US$665 million.
Traders said the huge deficit in the countrys balance-of-payments position overshadowed the impact of the continuing growth in remittances from Filipinos working abroad. The Philippines reported its largest deficit in October, which ran to over US$1 billion despite remittances growing 17% in the first nine months.
Citibank analyst Jun Trinidad said risk aversion was dragging down equity markets and emerging-market currencies.
The Philippine governments downgrade of its growth and fiscal targets for next year, lethargic exports in September and weaker [gross international reserves] in October left the peso vulnerable to offshore risk aversion, Trinidad said.
Trinidad noted that the swings in the peso trading were bigger than those of the swings in other major currencies despite the central banks heavy intervention.
Banco de Oro chief market strategist Jonathan Ravelas said the market would test the 50 level, with the near term target now at 50.50 to 50.70.
Oil prices, meanwhile, lingered near US$55 a barrel Tuesday in Asia as investors mulled more dire news pointing to a prolonged recession in developed countries and continuing weakness in demand for crude.
Light, sweet crude for December delivery was up 36 cents to US$55.31 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Singapore. The contract Monday fell US$2.09 to settle at US$54.95, the lowest since January 2007. Prices have fallen about 62% since reaching a record US$147.27 in mid-July.
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