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THE PESO slipped further against the dollar on Monday as local financial markets watch out for the May inflation print.
The local unit ended Monday’s session at P52.58 against the greenback, three centavos lower than the P52.55-per-dollar finish on Friday.
The peso slid as it opened the trading session at P52.58 versus the dollar. It declined further to hit a low of P52.60, while its intraday high stood at P52.50 against the greenback.
Dollars traded were at $493.8 million, down from the $587.5 million that switched hands last Friday.
Traders interviewed on Monday said the peso traded within a tight range as investors stayed on the sidelines ahead of May inflation data due for release by the Philippine Statistics Authority Tuesday, June 5.
“The peso traded fairly quiet today. The volume was also lower than usual,” the trader said in a phone interview on Monday.
“I think investors are waiting for the Philippine inflation data on Tuesday. That’s why we traded within the range.”
Sought for comment, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said May headline inflation “may well be near 5%.”
Analysts said in a BusinessWorld poll that inflation in May may have picked up from a year ago to a fresh five-year high. The poll among 10 economists yielded a 4.9% median rate which, if realized, falls in the midpoint of the central bank’s 4.6-5.4% forecast range given last week.
This median estimate is also well beyond the government’s 2-4% target for the year.
Mr. Asuncion, who gave an estimate matching the median rate, said faster inflation may dampen the peso further.
“It may weaken the peso further. It’s a risk I have flagged,” he said. “However, it seems the main driver [of the inflation], higher global oil prices, have recently eased.”
Meanwhile, another trader attributed the weak peso to upbeat jobs data out of the US.
“The peso weakened today following the release of higher-than-expected US non-farm payrolls data last Friday,” the trader said in an e-mail on Monday.
The US economy added 223,000 new jobs last month, better than the market expectation of 188,000. On top of this, the unemployment rate was at its 18-year low of 3.8%.
For Tuesday, Mr. Asuncion sees the peso moving between P52.40 and P52.80 against the greenback, while the first trader gave a P52.50-P52.65 forecast range.
“The peso might find some strength [on Tuesday] ahead of likely stronger local inflation data,” the second trader noted, saying the peso may trade between P52.40 and P52.70. — Karl Angelo N. Vidal

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