Backlash on the peso

Volatility in the Philippine peso United States (US) dollar market will persist as long as no concrete actions are taken to address the political uncertainties that have seeped into the financial markets.

- FIL C. SIONIL

This uncertainty will eventually impact the country's potential for economic growth.

Yes, Virginia, our dear local currency will continue to be under attack despite its seeming recovery to the highs of ₱58. This is simply because the long weekend makes currency traders more cautious, while other markets in the region remain open.

The peso is expected to slug it out against the greenback due to a confluence of developments in the offshore market-the depreciation of the Japanese yen on Wednesday, Oct. 29, and the lingering uncertainty in US-China trade relations-combined with domestic political conditions.

The worst-case scenario is for the peso to break the senior level of ₱60 in the coming weeks before it settles back to the highs of ₱58. This slight recovery is expected with heightened dollar remittances as the holiday season nears.

The latest I've heard along the banking corridors is that there has been convergence among floodgate proponents, with some involved pulling out local currency and converting it to dollars through the gray market. This has triggered a high demand for greenbacks.