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Peso drops on weak trade data

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THE PESO weakened further against the dollar on Friday as the country’s trade deficit expanded in December.

The local currency closed the week at P51.48 versus the dollar, down 17 centavos from its P51.31 finish on Thursday.

The peso traded weaker the whole day, opening the session at P51.58 against the greenback. It hit a low of P51.79 intraday, while its best showing was at P51.43 per dollar.

Dollars traded spiked to $1.17 billion from the $896 million that changed hands in the previous trading session.

“[The] peso weakened because of the wider trade deficit in December… the market responded negatively to the data release,” Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, told BusinessWorld in a mobile phone message.

Philippine Statistics Authority (PSA) data released on Friday showed that the country’s trade deficit widened to $4.02 billion in December from the $2.47 billion recorded a year ago and the $3.78 billion booked in November.

Imports grew to $8.74 billion by 17.6% from $7.43 billion a year ago.

Meanwhile, outbound shipments contracted to $4.72 billion by 4.9% from $4.96 in December 2016. This was due to fewer exports of coconut oil, ignition wiring and other wiring sets used for vehicles, aircrafts and ships, other manufactured goods and metal components, preliminary data from PSA showed.

Still, the wider trade deficit is “fundamentally not a concern,” Mr. Asuncion said.

“It’s not a concern because these are basic signs of a growing economy. The Philippines is a growing one and investments have to grow rapidly to propel it to a higher growth trajectory.”

“[The speech of some Fed officials] increased the likelihood of a policy rate hike by the Fed in March,” another trader added. — K.A.N. Vidal