THE PESO could strengthen versus the greenback this week due to expectations of slower inflation in November and an improving job market.
The local unit closed at P50.36 per dollar on Friday, appreciating by four centavos from its P50.40 finish on Thursday, based on data from the Bankers Association of the Philippines.
The peso also gained seven centavos from its P50.43 close a week earlier.
The local unit appreciated versus the dollar due to positive market sentiment after two straight days of gains in the local stock market, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The benchmark Philippine Stock Exchange index ended trading at 7,055.19 on Friday, up 22.65 points or 0.32% from its previous finish.
The all shares index also gained 17.7 points or 0.47% to 3,790.
Robust manufacturing data also helped boost the peso during the week, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.
The Philippines Manufacturing Purchasing Managers’ Index (PMI) was at 51.7 in November, rising from its 51 reading in October, IHS Markit reported on Wednesday. This was the best reading since the 52.2 in March.
A reading above 50 shows expansion in manufacturing activity, while one below signifies contraction. November’s upbeat PMI data was backed by higher new orders, IHS Markit said.
Mr. Asuncion said the likely slower inflation last month could support the peso’s appreciation versus the greenback.
Headline inflation likely slowed last month due to slower increase in food prices and the reduction in global oil prices, analysts said.
A BusinessWorld poll of 18 analysts yielded a median estimate of 4% for the November inflation, which is closer to the upper end of the 3.3% to 4.1% estimate given by the Bangko Sentral ng Pilipinas (BSP) for the month.
If realized, last month’s consumer price index will match the higher end of the 2-4% target of the BSP and be slower than the 4.6% in October and the 3.7% logged a year earlier.
The Philippine Statistics Authority (PSA) will release November inflation data on Tuesday, Dec. 7.
The market will also be monitoring job market data, Mr. Ricafort said. The PSA will also report the October round of the Labor Force Survey on Tuesday.
In September, the jobless rate rose to 8.9% from 8.1% in August. This is the highest this year as it matched the February print and is equivalent to 4.25 million unemployed Filipinos from 3.88 million in August.
For this week, Mr. Ricafort gave a forecast range of P50.15 to P50.55, while Mr. Asuncion expects the local unit to move within P50.20 to P50.60 per dollar. — L.W.T. Noble