THE PESO slid further against the dollar on Tuesday along with other Asian currencies as Japan elected a new prime minister (PM) viewed as conservative.
The local unit closed at P58.225 versus the greenback, weakening by 5.5 centavos from its P58.17 finish on Monday, Bankers Association of the Philippines data showed. This was its worst close in over a week.
The peso opened Tuesday’s session a tad stronger at P58.15 versus the dollar. It climbed to as high as P58.08, while its intraday low P58.26 against the greenback.
Dollars traded rose to $1.43 billion on Tuesday from $1.13 billion on Monday.
“The dollar-peso closed higher as the market was still in consolidation awaiting major catalysts,” a trader said in a phone interview.
The peso dropped as the dollar rose as Japan’s new prime minister was elected, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The incoming prime minister is expected to be pro-growth, thereby reducing the odds of further rate hikes by the Bank of Japan, and a weaker yen could support the export-driven Japanese economy,” he said.
For Wednesday, the trader said the peso could move between P58 and P58.30 per dollar as players await US consumer inflation data. Mr. Ricafort expects it to trade from P58.10 to P58.35.
The yen eased to a six-day low after hardline conservative Sanae Takaichi was elected as Japan’s first female prime minister, with traders betting her government could bring about a muddied rate outlook and greater fiscal largesse, Reuters reported.
Ms. Takaichi, leader of Japan’s ruling Liberal Democratic Party, won the lower house vote to choose the next prime minister on Tuesday. The Japanese currency was last down 0.25% at 151.35 per dollar after touching 151.61, its lowest level against the dollar since Oct. 15. The yen also struggled against the euro and sterling.
In the broader market, currencies were mostly rangebound despite an overall upbeat market mood after US President Donald J. Trump said on Monday he expects to reach a trade deal with Chinese President Xi Jinping.
The dollar index, measuring the currency against six peers, drew support from a weaker yen and rose to a six-day high. It was last up 0.2% to 98.787. — Aaron Michael C. Sy with Reuters