Peso sinks vs dollar as trade deficit widens in March

THE PESO slumped against the dollar on Tuesday after the country’s trade deficit widened in March.

The local currency closed at P55.76 versus the dollar on Tuesday, weakening by 51 centavos from Monday’s P55.25 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Tuesday’s session at P55.45 per dollar. Its worst showing for the day was at P55.78, while its intraday best was at P55.40 versus the greenback.

Dollars traded jumped to $1.659 billion on Tuesday from the $989.15 million recorded on Monday.

The peso weakened due to weak trade data, a trader said in a Viber message.

The local currency weakened “after the latest trade deficit widened,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Preliminary data from the Philippine Statistics Authority showed the country’s trade balance amounted to a $4.93-billion deficit in March, widening from the $3.91-billion shortfall recorded in the previous month and the $4.59-billion deficit in March last year.

Mr. Ricafort added that the latest upward correction in the dollar and global crude oil prices dragged the peso down.

Oil prices rose over 2% on Monday, with Brent crude up $1.71 or 2.3% at $77.01. US West Texas Intermediate (WTI) crude also gained $1.82 or 2.6% to $73.16, Reuters reported.

Meanwhile, the US dollar index steadied at around 101.44 against a basket of currencies, paring some of its earlier gains over the course of the trading session on Tuesday.

For Wednesday, the trader expects the peso to trade between P55.50 and P56 against the dollar, while Mr. Ricafort sees it moving from P55.65 to P55.85. — AMCS with Reuters