Peso drops vs dollar on positive US data

THE PESO weakened against the dollar on Monday following the release of strong US retail sales and weaker-than-expected remittances from overseas Filipinos.

The local unit closed Monday’s session at P52.145 versus the dollar, down 12.5 centavos from the P52.02-per-dollar finish last Friday.

The peso opened the session weaker at P52.05 per greenback, which was already near its intraday high of P52.04. Meanwhile, it dropped to as low as P52.21 versus the US currency during the session.

Trading volume climbed to $955.73 million from the $870.39 million that switched hands in the previous session.

A trader said in a phone interview that the peso declined against the dollar at the start of session to track the stronger greenback over the weekend, driven by the strong US retail sales report.

The US Commerce Department said on Friday that retail sales picked up 0.5% in May, bolstered by higher sales of cars and other goods.

Retail sales in April was also revised to a 0.3% growth from a 0.2% drop earlier reported.

“Given the stronger retail sales, this boosted the dollar index against euro, pound and yen,” the trader said.

The trader added that the peso’s decline continued in the afternoon session following the release of weaker-than-expected local remittances data.

The Bangko Sentral ng Pilipinas reported yesterday that cash sent home by Filipinos abroad amounted to $2.4 billion in April, up 4% from $2.3 billion booked in the same month in 2018. This was driven by remittances from the United States, Saudi Arabia, Singapore, United Arab Emirates and the United Kingdom.

“Philippine remittances came out lower than expected. The previous data posted a 6.6% growth and the market expectation was at 4.6%. But the actual data came out at 4%,” the trader said.

Meanwhile, another trader said the peso weakened on Monday amid dampened hopes of a near-term trade resolution between the US and China after US Trade Secretary Wilbur Ross downplayed a possible major trade deal that might be achieved at the G-20 Summit in Japan later this month.

For today, the first trader expects the peso to trade between P52 and P52.30, while the other gave a P52.10-P52.30 range. — Karl Angelo N. Vidal