The peso fell to a four-month low against the dollar on Wednesday as Donald J. Trump claimed victory in the US presidential election.
The local unit closed at P58.661 per dollar on Wednesday, down 34.6 centavos from its close of P58.315 on Tuesday, data from the Bankers Association of the Philippines said.
This was the peso’s lowest close in more than four months or since it topped P58.725 per dollar on July 3.
The peso opened Wednesday’s session weaker at P58.50 against the dollar, which was already the best during the day. Its worst showing was at P58.77 against the greenback.
Dollars exchanged jumped to $1.91 billion on Wednesday from $1.15 billion on Tuesday.
“The dollar-peso ended higher because of the election with Trump in the lead,” a trader said by phone.
“Peso weakened after US presidential election results point to Trump’s second term,” one trader said in an email.
Markets are already pricing in a possible victory for Mr. Trump, which led to a generally stronger dollar and higher US Treasury yields, Rizal Commercial Banking Corp. Chief Economist. Michael L. Ricafort likewise in a Viber message.
Investors bought dollars, bitcoin and stocks, and sold bonds as Mr. Trump claimed to have won the US presidential election and Republicans control at least one chamber of Congress, Reuters reported.
US stock futures hit record highs, the dollar rose and Treasury yields jumped, while bitcoin broke $75,000 for the first time – all moves flagged by investors as Trump’s potential victory over Democrat Kamala Harris.
The results so far underscore how the rarest presidential election in modern US history can have far-reaching implications for tax and trade policy and US institutions.
The results affect assets around the world and will determine the outlook for the US debt, the strength of the dollar, and a host of industries that form the backbone of American business.
Until Tuesday, the polls showed a lot of heat between the former president and his deputy. But at 2 a.m. ET, Mr. Trump had already won the states of North Carolina and Georgia and was leading in several others, according to Edison Research.
Fox News announced that he had won the presidency.
Republicans also won the US Senate, ensuring that they will control at least one chamber of Congress next year.
Goods whose prices can be helped by the promises of Mr. Trump’s tax hikes, tax cuts and slash laws flashed, while traders said cash was flowing out of emerging markets and US Treasury bonds were pulled in anticipation of a ballooning deficit.
On Thursday, the first trader said the peso could continue to weaken as markets continue to react to the election results and the US Federal Reserve is set to announce its policy decision overnight. A second trader added that the likely slow growth of Philippine gross domestic product (GDP) in the third quarter could weigh on the peso. The government will release GDP data on Thursday (Nov. 7).
The first trader sees the peso moving between P58.50 to P59 per dollar, while the second trader expects it to range from P56.55 to P56.80. Mr. Ricafort predicts the peso will trade between P58.55 and P58.75. – AMCS with Reuters
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