THE PESO retreated versus the greenback on Wednesday ahead of the release of the US central bank’s decision and following revisions to the country’s gross domestic product (GDP) data in the third quarter of 2021.
The local unit closed at P51.29 per dollar on Wednesday, depreciating by three centavos from its P51.26 finish on Tuesday, based on data from the Bankers Association of the Philippines.
The peso opened Wednesday’s session barely changed at P51.25 per dollar. Its weakest showing was at P51.305, while its intraday best was at P51.18 versus the greenback.
Dollars exchanged dropped to $787.8 million on Wednesday from $1.041 billion on Tuesday.
“The peso weakened from hawkish expectations ahead of the Federal Reserve policy decision overnight,” a trader said in an e-mail.
The Federal Market Open Committee was set to announce its monetary policy stance overnight after its Tuesday to Wednesday review. The market was waiting for signals on the timetable of its interest rate hikes.
Investors expect the Fed to hike interest rates three times this year starting as early as March, according to a Reuters poll last week.
The dollar index, which measures the currency against six major peers, edged 0.06% higher to 96.030, after climbing to 96.273 on Tuesday, its strongest level since Jan. 7. It has rallied as much as 1.74% from a two-month low touched on Jan. 14.
Another trader said the downward-revised third-quarter gross domestic product (GDP) data also made investors cautious.
The Philippine economy expanded by 6.9% in the third quarter, slower than the 7.1% initial estimate, based on data released by the Philippine Statistics Authority (PSA) on Wednesday. This brought growth for the first nine months to 4.8% from 4.9% initially.
Fourth-quarter GDP data will be reported by the PSA on Thursday.
A BusinessWorld poll of 18 analysts last week yielded a median estimate of 6.5% for the fourth quarter, which could in turn bring the full-year growth to 5.3% for 2021.
If realized, the full-year estimate will be within the downgraded 5-5.5% target set by economic managers. It would also be a turnaround from the record 9.6% contraction in 2020.
For Thursday, both traders expect the local unit to move within P51.20 to P51.40 per dollar. — L.W.T. Noble with Reuters