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THE PESO may depreciate versus the greenback this week ahead of the release of January US jobs data, which is seen to support the planned monetary policy tightening of the US Federal Reserve starting March.

The local unit finished at P51.23 per dollar on Friday, gaining 11 centavos from its P51.34 close on Thursday, based on data from the Bankers Association of the Philippines.

Week on week, it appreciated by three centavos from its P51.37 close on Jan. 21.

The peso strengthened after the government announced it will relax travel restrictions on arriving Filipinos and some foreigners, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Cabinet Secretary Karlo Alexei B. Nograles said at a Friday briefing on Friday that fully vaccinated international passengers will no longer be required for a facility quarantine upon arrival starting February. They will instead need to present a negative PCR test, taken within 48 hours before departure from the country of origin.

Travelers are currently categorized under color-coded scheme depending on the perceived infection risk of their country of origin.

Stronger-than-expected economic growth in the fourth quarter of 2021 also boosted the peso last week, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

Gross domestic product (GDP) rose by 7.7% in the three months to December, faster than the 6.9% in the third quarter, the Philippine Statistics Authority (PSA) reported on Thursday.

This brought 2021’s full-year expansion to 5.6%, turning around from the 9.6% contraction in 2020, which was due to the country having one of the world’s strictest lockdowns.

Last year’s GDP growth was also faster than the 5.3% median estimate of 18 economists in a BusinessWorld poll and surpassed the downgraded 5-5.5% target by economic managers.

For this week, Mr. Asuncion said the dollar could strengthen ahead of the release of US labor data. The January US nonfarm payrolls will be released on Friday, Feb. 4.

Reuters reported earlier that Fed Chairman Jerome H. Powell said they are determined to ensure high inflation did not become entrenched. He said Fed actions “should not have negative effects on the employment market.”

After their policy review last week, Mr. Powell said the US central bank may start increasing interest rates in March to tame runaway inflation.

Meanwhile, Mr. Ricafort said the market will also take cues from the release of Philippine inflation data.

The PSA will release the January consumer price index report on Feb. 4, Friday.

The Bangko Sentral ng Pilipinas (BSP) is expected to release its inflation forecast for the month this Monday.

A BusinessWorld poll of 16 analysts last week yielded a median estimate of 3% for January inflation.

If realized, this will be the second consecutive month that inflation was within the BSP’s 2-4% target. It will also be slower than the 3.6% logged in December 2021.

Analysts said inflation likely slowed due to base effect and lower demand as infections spiked, even amid upward price pressures due to higher oil prices and the impact of Typhoon Odette to food supply.

For this week, Mr. Ricafort expects the local unit to move within P51 to P51.40 versus the dollar, while Mr. Asuncion gave a forecast range of P51 to P51.50. — L.W.T. Noble with Reuters

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