The Philippine peso fell its lowest this month on Friday due the dollar's overnight rally against the euro, while the spread between the currency's onshore and offshore forwards narrowed. Weaker Asian stocks due to investors' concerns over earnings also undermined regional currencies, but the dollar's retreat from its three-month high against the euro provided some support.
Economic fundamentals supporting Asian currencies remain intact, but analysts warn that they could face downward pressure in the near term due to the dollar's resurgence. The Swiss franc climbed as investors unwound long dollar and euro positions in the approach to the year-end, helped by rumours of a coup in Pakistan that were quickly denied and by stop-loss orders which propelled it up. Markets in Malaysia and Indonesia were shut for holidays.
PESO The peso shed 0.4 percent to its lowest this month at 46.78 per dollar. The Philippine central bank on Thursday kept interest rates unchanged, as expected and signalled it was in no hurry to tighten policy. "Dollar/peso moves higher on the back of a weak euro. Ill-liquidity on the majors is putting pressure on the pair," said a Manila-based dealer.
The peso later recovered to 46.67 as the euro inched up to $1.4380 from its 3-month low of $1.4304 hit on Thursday. One-month dollar/peso non-deliverable forwards (NDFs) eased to 46.81 in thin trade, implying a 0.3 percent peso fall from the spot. Meanwhile, one-month onshore forwards retreated at a faster pace to 46.811. So the NDFs were at par with onshore forwards as the spread between the forwards narrowed from 13 points on Thursday, indicating less opportunity for arbitrage.
BAHT The approaching holiday season kept the baht in a narrow range between 33.12 and 33.28 per dollar. Dollar/baht was quoted at 33.20, little changed from Thursday. "Investors are gradually moving to square dollar positions ahead of the New Year but we don't expect the baht to dip beyond 33.30 between now and the New Year," said a Bangkok-based trader.
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