THE PESO could weaken against the dollar this week on bets of stronger economic growth in the United States as well as hawkish comments from foreign central banks.
The local unit moved sideways versus the greenback last Friday to end the week at P52.095-per-dollar. Week on week, the peso depreciated compared to the P51.95 finish on April 13.
“The dollar might move with an upward bias against the peso this week amid calming remarks from US Federal Reserve officials, likely upbeat US economic data, and bets of less-hawkish policy remarks from the European Central Bank and Bank of Japan,” Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines, said when sought for comment.
Reuters reported two officials of the Federal Reserve allayed concerns over a flat yield curve in the US, saying that growth prospects remain strong and increased state spending will push market rates higher and prevent a recession.
Meanwhile, the US is set to release initial growth data for the first quarter on Friday.
However, Mr. Dumalagan said that lingering geopolitical concerns involving the US-China trade war, and air strikes involving the US, Russia and Syria could urge some profit taking and could cap gains for the dollar.
“Speculations of a possible rate hike from the BSP (Bangko Sentral ng Pilipinas) next month may also limit the greenback’s strength against the local currency,” the economist added.
A currency trader said that the peso could keep moving sideways versus the dollar due to lack of leads in the local scene, as market players await key economic data which are due early May.
“I think everyone’s waiting for next Monetary Board decision and data on local inflation,” the trader said on Friday.
The central bank will review its policy stance on May 10, the same day when the Philippine Statistics Authority will report first-quarter domestic growth data. Several analysts expect the BSP to raise benchmark rates by 25 basis points, saying that the hike is necessary to curb inflation as it maintains its ascent.
Prices of widely-used goods rose by 3.8% year-on-year during the first quarter, hovering close to the high end of the central bank’s 2-4% target range.
Mr. Dumalagan expects the peso to move within P51.90 to P52.40 versus the dollar, while the trader sees the currency trading within the P51.80-P52.20 range this week. — Melissa Luz T. Lopez
