Peso sinks on US data, geopolitical tensions
THE PESO retreated versus the greenback on Monday amid demand for the dollar on better-than-expected US jobs data and geopolitical tensions between Ukraine and Russia.
The local unit closed at P51.37 per dollar on Monday, sinking by 23 centavos from its P51.14 finish on Friday, data from the Bankers Association of the Philippines showed.
The peso opened Monday’s session weaker at P51.25 per dollar. Its worst showing was at P51.38, while its intraday best was at P51.22 against the greenback.
Dollars exchanged increased to $959.3 million on Monday from $892.5 million on Friday.
A trader in an e-mail said the peso weakened as the market priced in higher-than-expected additional jobs in the US, which strengthens the case for the US Federal Reserve’s plan to hike rates starting next month.
Preliminary data from the US Labor department on Friday showed nonfarm payrolls rose by 467,000 in January despite the Omicron surge. This is more than the 150,000 jobs added expected by analysts in a Reuters poll.
Fed officials have signaled that they may start increasing interest rates next month to cool rising inflation as the economy is already recovering.
The dollar fared better on the Japanese yen as the market still sees little chance the Bank of Japan will tighten this year. It was steady at 115.30 yen, while the euro was at 132.82 yen having climbed by 2.7% last week.
The wild swing in the euro left the US dollar index to recuperate at 95.569, after shedding 1.8% last week.
The single currency was last down about 0.2% at $1.1430, having shot up by 2.7% last week in its best performance since early 2020. Technically, a break of resistance around $1.1482 would open the way to $1.1600 and higher.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said the peso depreciated due to cautious sentiment amid geopolitical tensions between Ukraine and Russia and its possible implication to oil prices.
White House national security adviser Jake Sullivan on Sunday said Russian President Vladimir Putin could order an attack on Ukraine within days or weeks, Reuters reported. More than 100,000 Russian troops have advanced near the Ukraine border, but Moscow maintains it is not planning an invasion but could take unspecified military action if its security demands are not met.
For Tuesday, Mr. Ricafort gave a forecast range of P51.25 to P51.45 per dollar, while the trader expects a wider band of P51.25 to P51.50. — LWTN with Reuters
