Peso may rise vs dollar on remittance inflows ahead of Holy Week break
THE PESO may appreciate versus the greenback this week due to expected remittance inflows for the Holy Week holidays and amid the recent decline in oil prices.
The local unit closed at P51.59 per dollar on Friday, weaker by 17 centavos from its P51.42-a-dollar finish on Thursday, based on Bankers Association of the Philippines data.
Still, it strengthened by eight centavos from its P51.67 finish a week earlier.
The peso opened at P51.45 versus the dollar on Friday, which was also its intraday best. Meanwhile, its weakest showing was at P51.62 against the greenback.
Dollars exchanged increased to $1.056 billion on Friday from $885.5 million on Thursday.
The peso was weaker on Friday due to fresh hawkish signals from the US Federal Reserve.
St. Louis Fed President James Bullard on Thursday said the central bank is already “behind the curve” in taming inflation, adding interest rates need to increase by another 3 percentage points by the end of 2022, Reuters reported.
The Fed in March raised interest rates by a quarter percentage point for the first time since 2018 to help fight rising inflation.
“I would like to get there in the second half of this year… We have to move,” to get ahead of inflation running at triple the Fed’s 2% target,” Mr. Bullard said.
Market players also priced in a statement from the Bangko Sentral ng Pilipinas (BSP) chief noting the local central bank’s readiness to respond to rising inflation risks, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.
BSP Governor Benjamin E. Diokno on Tuesday said they are ready to take preemptive action if inflation expectations become at risk or disanchored. He said March consumer price index data released that day suggest inflation will likely be elevated in the coming months.
Headline inflation in March was at 4%, matching the upper end of the central bank’s 2-4% target. It was quicker than the 3% in February, showing the impact of the surge in oil prices caused by the Russia-Ukraine war.
This week, Philippine financial markets will be closed from Thursday to Friday in observance of Holy Week.
Mr. Ricafort said the peso could be supported by a possible increase in remittances for the coming holidays.
Meanwhile, Mr. Asuncion said participants will continue to monitor the war in Ukraine and its impact on oil prices.
Kremlin spokesperson Dmitry Peskov on Thursday said they have already incurred significant losses in Ukraine since it invaded the country on Feb. 24, Reuters reported.
The United Nations said more than a thousand civilians have been killed since the war started, and its true toll is likely to be much higher.
Oil futures on Friday increased by 2%, but still posted its second consecutive weekly decline as countries committed to plans of releasing crude from their stocks due to supply concerns caused by the war in Ukraine.
For this week, Mr. Ricafort gave a forecast range of P51.30 to P51.70 per dollar, while Mr. Asuncion expects the local unit to move within P51.10 to P51.60 — L.W.T. Noble with Reuters
