THE PESO inched higher against the dollar on Tuesday ahead of the local monetary policy meeting as well as inflation data in the US.
The local currency ended at P51.85 versus the greenback yesterday, two centavos stronger than the P51.87-per-dollar finish on Monday.
The peso traded within range, opening the session slightly stronger at P51.86 against the greenback. It dropped to as low as P51.945, while its best showing stood at P51.83 versus the dollar.
Dollars traded soared to $727 million from the $585 million logged the previous session.
Traders interviewed yesterday said the peso-dollar pair “traded fairly quiet” and moved within a tight range.
“Although there was volume, there’s no direction as to where the next direction for the dollar-peso will be,” a trader said in a phone interview.
The trader added: “We’re still waiting for the BSP (Bangko Sentral ng Pilipinas) meeting on Thursday.”
Investors are on a wait-and-see stance ahead of the monetary policy meeting of the BSP tomorrow.
In a BusinessWorld poll, nine out of 11 economists said the monetary authority will likely hike benchmark rates at Thursday’s meeting as inflation hit multi-year highs in the previous months.
Inflation has been accelerating steadily this year. It picked up to a five-year high of 4.5% last month from the 4.3% print logged in March.
The BSP has also said inflation is becoming broader than initially expected.
“What we react to is whether it’s spreading and it is affecting expectations. And our reading, based on the latest data, it seems to have spread somewhat,” BSP Governor Nestor A. Espenilla, Jr. said last week ahead of the April data.
Aside from the BSP’s monetary policy meeting, another trader said investors a also waiting for the US consumer price data.
“The peso moved sideways today despite being generally weaker within the day on expectations of strong US consumer price index (CPI) data this week,” another trader said on Tuesday.
For today, the first trader sees the peso moving between P51.80 and P51.95 versus the dolar, while the other gave a wider P51.70-P52 forecast range.
“The local currency is still seen to move sideways as investors will factor in possibly stronger US CPI data and bets ahead of likely upbeat Philippine GDP (gross domestic product) data due to be released on Thursday.”
A separate BusinessWorld poll of 10 economists yielded a 6.8% median GDP growth estimate for the January to March period on the back of higher household and consumer spending.
The median rate is higher than the 6.5% economic growth tallied in the same period last year. — K.A.N. Vidal