Peso rises as dollar drops on recession fears
THE PESO strengthened against the dollar on Tuesday as US manufacturing data stoked fears of a global recession and dragged the greenback down.
The local currency closed at P54.495 versus the dollar on Tuesday, appreciating by 23.5 centavos from Tuesday’s P54.73 finish, data from the Bankers Association of the Philippines’ website showed.
The peso opened Tuesday’s session at P54.60 per dollar. It logged an intraday best of P54.46, while its worst showing was at P54.65 versus the greenback.
Dollars traded dropped to $889.7 million on Tuesday from the $1.201 billion recorded on Monday.
The peso appreciated after latest US manufacturing data caused recession fears, which affected the dollar, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso appreciated amid lingering recession concerns following the release of the downbeat US manufacturing PMI (purchasing managers’ index) report for March,” a trader likewise said in a Viber message.
The dollar wobbled on Tuesday after a slump in US manufacturing activity last month pointed to further signs of a slowing economy and trumped renewed inflation concerns following OPEC+’s surprise output cut, Reuters reported.
The Institute for Supply Management survey showed on Monday that manufacturing activity fell to the lowest level in nearly three years in March as new orders continued to contract, with all subcomponents of its manufacturing PMI below the 50 threshold for the first time since 2009.
That sent the greenback broadly lower, tracking a slide in US Treasury yields, as investors pared expectations on how much longer interest rates would need to remain in restrictive territory.
The US dollar index was marginally lower at 102.02, having fallen more than 0.5% on Monday.
Mr. Ricafort added that the peso appreciated ahead of the release of March inflation data on Wednesday and amid the seasonal increase in remittances ahead of non-working days in commemoration of Holy Week.
A BusinessWorld poll of 16 analysts yielded a median estimate of 8.1% for March headline inflation, near the upper end of the 7.4% to 8.2% forecast of the central bank.
For Wednesday, the trader said the peso could rise further on expectations that headline inflation eased further in March.
The trader sees the peso moving between P54.35 and P54.60 per dollar on Wednesday, while Mr. Ricafort expects it to trade from P54.40 to P54.60. — A.M.C. Sy with Reuters
