Peso strengthens to P55:$1 level
THE PESO ended at the P55-a-dollar level for the first time in three months on Monday amid expectations of strong gross domestic product (GDP) growth last quarter.
The local unit closed at P55.91 per dollar on Monday, strengthening by 19 centavos from its P56.10 finish on Friday, based on Bankers Association of the Philippines data.
This was the peso’s best close in more than three months and was the first time it ended at the P55 level since its P55.74-per-dollar finish on Aug. 4.
The peso opened Monday’s session at P55.80 against the dollar. Its weakest showing was at P55.93, while its intraday best was at P55.73 versus the greenback.
Dollars exchanged dropped to $1.15 billion on Monday from $1.84 billion on Friday.
“The peso appreciated amid market views of a potential rebound in the third-quarter domestic economic growth report this week,” a trader said in an e-mail.
A BusinessWorld poll of 18 economists and analysts conducted last week yielded a median estimate of 4.9% for third-quarter GDP growth.
This would bring the nine-month GDP growth average to 5.2%, still below the government’s 6-7% full-year target.
The Philippine Statistics Authority will release third-quarter GDP data on Thursday.
The peso was supported by the seasonal increase in remittances and opposing signals from the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP), Security Bank Corp. Chief Economist Robert Dan J. Roces added.
“The peso continued to track the regional rally, appreciating as dollar strength faded with the Fed pausing last week and looking like they could refrain from hiking further. This confirms that there was very little pressure on the peso, with the currency not in need of policy support,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message.
The Fed kept its benchmark interest rate steady at the 5.25%-5.5% range for a second straight time during its meeting from Oct. 31 to Nov. 1.
The US central bank has hiked rates by a cumulative 525 basis points (bps) since it began its tightening cycle in March last year.
Meanwhile, the BSP implemented an off-cycle 25-bp hike on Oct. 26 ahead of its Nov. 16 meeting, bringing its policy rate to 6.5%.
The BSP has raised interest rates by 450 bps since May 2022 to temper inflation.
For Tuesday, the trader said the peso could strengthen further amid likely slower October inflation.
The trader expects the peso to move between P55.75 and P56 per dollar on Tuesday, while Mr. Roces expects it to range from P56.50 to P56.90 for the week. — AMCS
