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THE PESO inched up against the dollar on Monday ahead of the release of June inflation data and hawkish signals from the new Bangko Sentral ng Pilipinas (BSP) chief.

The local unit closed at P55.08 per dollar on Monday, inching up by a centavo from its P55.09 finish on Friday, based on data from the Bankers Association of the Philippines.

The peso opened Monday’s session at P55.12 versus the dollar. Its weakest showing was at P55.21, while its intraday best was at P54.97 against the greenback.

Dollars exchanged decreased to $976.26 million on Monday from $1.29 billion on Friday.

The local unit ended slightly stronger against the dollar ahead of the release of latest inflation data and as the new BSP chief said a bigger rate hike is possible to curb rising prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Mr. Ricafort said the peso also got some support from gains in the local stock market that tracked Wall Street.

“The local currency slightly weakened due to some market caution ahead of the Philippine inflation report tomorrow,” a trader said in an e-mail on Monday.

The Philippine Statistics Authority will release its June consumer price index (CPI) report on Tuesday, July 5. A BusinessWorld poll of 16 analysts last week yielded a median estimate of 6% for June headline inflation, within the 5.7-6.5% forecast given by the central bank.

If realized, this would be well above the BSP’s 2-4% target and 5% forecast for the year and would also be faster than the 5.4% print in May and 3.7% in June last year. This would also be the quickest monthly CPI print since the 6.1% seen in November 2018.

BSP Governor Felipe M. Medalla last week said the central bank may consider a more aggressive rate hike at its Aug. 18 meeting if inflation keeps its upward momentum, but noted the decision will remain data dependent.

The BSP Monetary Board on June 23 raised benchmark interest rates by 25 basis points for a second straight meeting to help temper rising inflation.

Meanwhile, the benchmark Philippine Stock Exchange index inched up by 18.27 points or 0.29% to close at 6,183.62 on Monday and the broader all shares index climbed by 8.34 points or 0.25% to 3,348.46.

Wall Street bounced back to a higher close on Friday as investors embarked on the second half of the year ahead of the long holiday weekend, Reuters reported. The Dow Jones Industrial Average rose 321.83 points or 1.05% to 31,097.26; the S&P 500 gained 39.95 points or 1.06% to 3,825.33; and the Nasdaq Composite added 99.11 points or 0.90% to 11,127.85.

For Tuesday, the trader said a faster June headline inflation print could bolster hawkish BSP policy expectations.

The trader expects the peso to move between P55 and P55.20 against the dollar, while Mr. Ricafort gave a forecast range of P54.95 to P55.15. — Keisha B. Ta-asan with Reuters