THE PESO dropped versus the dollar on Tuesday as global markets were hit with volatility due to political concerns in various countries and prospects of a US Federal Reserve rate cut next week.
The local unit closed at P56.98 against the greenback, weakening by 29 centavos from its P56.69 finish on Monday, Bankers Association of the Philippines data showed.
The peso opened Tuesday's session almost flat at P56.69 versus the dollar. It climbed to as high as P56.66, while its worst showing was at P57 against the greenback.
Dollars traded increased to $1.72 billion on Tuesday from $1.32 billion on Monday.
"The dollar-peso had a corrective bounce during the London session amid political uncertainty in France. The peso tracked the dollar's strength during the session," a trader said in a phone interview.
The peso corrected following its over one-month high close on Monday due to political concerns here and abroad and before the release of US inflation reports that could further support a Fed cut next week following the weak jobs data released recently, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
For Wednesday, the trader sees the peso moving between P56.80 and P57.20 per dollar, while Mr. Ricafort expects it to range from P56.85 to P57.10.
Overnight, US Treasury yields declined with the dollar on the prospects of lower interest rates and investors around the world grappled with political uncertainty in countries from Japan and Indonesia to France and Argentina.
A heavy election defeat for Argentina President Javier Milei's ruling party in Buenos Aires province sent the Argentine peso to a record low.
Japanese Prime Minister Shigeru Ishiba resigned on Sunday, ushering in a potentially lengthy period of uncertainty at a shaky moment for the world's fourth-largest economy, prompting the yen to fall against the dollar.
France's fourth prime minister in less than two years, Francois Bayrou, lost a confidence vote on Monday, and parliament brought down the government in the euro zone's second-largest economy over its plans to tame the ballooning national debt, deepening a political crisis.
And in Indonesia, stocks gave up early gains to finish down more than 1%, while the rupiah rose after Finance Minister Sri Mulyani Indrawati was ousted in a cabinet shake-up.