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Peso down as geopolitical risks boost demand for dollar

THE PESO ended weaker on Wednesday as investors flocked towards the safe-haven dollar amid rising geopolitical tensions.

The local unit closed at P57.35 against the dollar on Wednesday, down by 14 centavos from its finish of P57.21 on Tuesday, data from the Bankers Association of the Philippines’ website showed.

The peso opened the session at P57.38 against the dollar. Its weakest showing was at P57.58, while its intraday best was at P57.34 versus the greenback.

Dollars exchanged went up to $1.023 billion on Wednesday from $766.9 million on Tuesday.

The peso weakened due to geopolitical risks, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.

“The peso depreciated due to safe-haven demand following reports of Russian missile attacks in Poland,” a trader said in an e-mail.

A missile from an unknown source hit and killed two people in Poland, raising global alarm that the conflict in Ukraine could spill into neighboring countries.

The Polish foreign ministry said the rocket fell on Przewodow, a village about four miles from the border with Ukraine, Reuters reported.

Polish President Andrzej Duda said it was “most likely a Russian-made missile,” but there was no concrete evidence of who fired it.

Russia denied its military had targeted Poland.

“The US dollar/peso also corrected slightly higher after the decline in investment commitments data; but offset by stronger vehicle sales, foreign tourist arrivals, Bureau of Customs (BoC) revenue collections data,” Mr. Ricafort said.

Total approved foreign investments dropped to P13.05 billion in the third quarter from P16.82 billion in the same period a year ago, data from the statistics agency showed.

This was the smallest quarterly amount since the P8.981-billion investment pledges approved in the first quarter of this year. For the first nine months of 2022, approved foreign investment pledges rose 15.6% to P68.28 billion.

Meanwhile, vehicle sales rose by 42.4% to 32,146 units in October from 22,581 units sold in the same month last year.

Lastly, the BoC said on Tuesday that it has surpassed its 2022 revenue collection target. As of Nov. 11, the bureau collected a record P745.5 billion, exceeding its 2022 target by 3.32%.

For Thursday, the trader said the local currency might strengthen due to the widely expected 75-basis-point (bp) rate hike by the Bangko Sentral ng Pilipinas.

Mr. Ricafort sees the peso moving within P57.20 to P57.50 on Thursday, while the trader expects it to trade between P57.25 and P57.45 against the dollar. — K.B. Ta-asan with Reuters