THE PESO WEAKENED on Thursday as investors opted to buy more dollars amid heightened fears of the potential economic impact of the spread of a coronavirus from Wuhan, China.
The local unit finished trading at P50.98 against the dollar, depreciating by seven centavos from its Thursday close of P50.91 versus the greenback.
The peso opened at P50.96 against the dollar. Its weakest showing was at P51.049 while its intraday best was at P50.90 versus the greenback.
Dollars traded declined to $981 million from the $1.093 billion seen on Wednesday.
A trader and an analyst attributed the peso’s decline to worries over the impact of the China coronavirus on the economy.
“The peso depreciated as global fears over the possible economic impact of the China coronavirus have driven fresh appetite for the dollar,” a trader said in an e-mail.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort also attributed the peso’s weakening to some “risk aversion” in the market due to the virus.
“Concerns over the latest coronavirus partly led to some increase in market risk aversion, especially in affected Asian countries, with potential effects on the regional economy and financial markets similar to the MERS (Middle East Respiratory Syndrome) and SARS (Severe Acute Respiratory Syndrome) in the past,” Mr. Ricafort said in a text message.
He said, however, that the weakness in the peso was somehow tempered due to the 2% gain in the Philippine Stock Exchange index after the release of the stronger fourth-quarter gross domestic product (GDP) growth data of 6.4%.
This brought full-year GDP growth for 2019 to 5.9%, short compared to the minimum target of six percent set by the government.
Reuters reported that the new coronavirus that was traced to have started in Wuhan, China has already killed 17 people and infected about 571 cases, citing data from China’s National Health Commission.
South China Morning Post reported on Wednesday that four family members of the first confirmed patient in Hong Kong boarded a Cebu Pacific flight to Manila on Wednesday morning.
On Tuesday, Reuters reported that the case of a five-year-old Chinese boy with a travel history to Wuhan is being investigated by the Department of Health as he tested positive for coronavirus.
Cases have also been confirmed in South Korea, Japan, Thailand, Taiwan, and as far as the US. Authorities are wary that the transmission rate might accelerate amid the coming Lunar New Year season when there will be heightened travels in Chinese cities.
Authorities have already shut down public transport networks and outgoing flights from Wuhan in an effort to prevent further escalation of cases.
The trader said the peso-dollar exchange rate might move within the P50.90-51.10 levels today, while Mr. Ricafort gave a forecast range of P50.85-51.10. — Luz Wendy T. Noble with Reuters