By Karl Angelo N. Vidal
THE PESO is seen moving sideways against the dollar today as optimism on the back of the upgraded economic outlook for the Philippines as well as the improved geopolitical situation in the Korean peninsula might be tempered by positive US economic data.
On Friday, the local currency strengthened further at P51.965 versus the greenback as S&P Global Ratings upgraded its credit outlook for the Philippine economy to positive from stable, hinting on better chances of a rating upgrade.
The Philippines currently holds a “BBB” rating from S&P, a notch above minimum investment grade. The rating has been on a “stable” outlook since April 2015 prior to this revision.
Week on week, the peso also strengthened from the P52.095-per-dollar finish on April 20.
A currency trader said on Friday that the peso will continue to regain its strength on the back of S&P’s revision of its credit outlook for the Philippines.
“[On Friday,] we closed much lower than the previous close. That continues to be the momentum. We’re continuing to see the peso regain some strength against the US dollar,” the trader said in a phone interview.
“The positive outlook reflects our view that improvements to the [Philippine] policy-making settings could support a track record of more sustainable public finances and balanced growth over the next 24 months,” S&P said in a statement sent late Thursday.
Meanwhile, Land Bank of the Philippines (LANDBANK) market economist Guian Angelo S. Dumalagan said the dollar “might move within a narrow band” against the peso amid “mixed developments since Friday evening and caution ahead of the Labor Day break.”
Financial markets will be closed tomorrow for the Labor Day holiday.
Meanwhile, although the US economic growth slowed in the first quarter at a 2.3% annual rate from the 2.9% pace in the previous quarter, the rate was better than the 2% consensus among economists in a Reuters poll.
Reuters added that the setback is “likely temporary against the backdrop of a tightening labor market and large fiscal stimulus.”
“This report was accompanied by upbeat US economic data on consumer sentiment and first-quarter personal consumption expenditure (PCE) inflation,” Mr. Dumalagan added.
“While these upbeat readings are positive for the dollar, they may not significantly push greenback higher due to investors’ improving appetite for riskier currencies last week’s agreement between North and South Korea…”
South Korean President Moon Jae-in and North Korean leader Kim Jong-un met on Friday at the border village of Panmunjom, vowing to foster peace and work together to denuclearize the peninsula.
“We are at a starting line today, where a new history of peace, prosperity and inter-Korean relations is being written,” Mr. Kim said before they began talks.
LANDBANK’s market economist added that some investors might stay on the sidelines “ahead of likely strong March 2018 US reports on PCE inflation, personal spending, and personal income as well as April 2018 US manufacturing data.”
For today, the trader sees the peso moving between P51.90 and P52.20, while Mr. Dumalagan gave a P51-70-P52.30 range for the week. — with Reuters

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