Peso weakens further as Philippine economic growth slows in Q3
THE PESO depreciated further against the dollar on Thursday due to slower-than-expected Philippine gross domestic product (GDP) growth last quarter.
The local unit closed at P58.73 per dollar on Thursday, declining by 6.9 centavos from its P58.661 finish on Wednesday, Bankers Association of the Philippines data showed.
This was the peso’s weakest close in over four months or since its P58.795-a-dollar finish on July 2.
The peso opened Thursday’s session weaker at P58.80 against the dollar. Its intraday best was at P58.68, while its worst showing was at P58.805 versus the greenback.
Dollars exchanged went down to $1.57 billion on Thursday from $1.91 billion on Wednesday.
“The dollar-peso consolidated with an upward bias, triggered by lower-than-expected third-quarter GDP data,” a trader said by phone.
The Philippine economy grew by 5.2% in the third quarter, slower than the revised 6.4% expansion in the second quarter and the 6% print in the same period last year. This was below the 5.7% median GDP growth forecast in a BusinessWorld poll of 12 analysts.
In the first nine months, GDP growth averaged 5.8%, below the government’s 6-7% annual target. The economy now needs to expand by 6.5% in the fourth quarter to meet this goal.
The peso declined as the dollar was generally stronger after Republican Donald J. Trump won the US presidential election, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.
For Friday, the trader said the peso could move between P58.50 and P58.80 per dollar, while Mr. Ricafort sees it ranging from P58.60 to P58.80.
The dollar edged lower on Thursday after hitting a four-month high following Mr. Trump’s win in the US presidential election, while investors awaited policy decisions from the Federal Reserve and other central banks, Reuters reported.
The Fed was expected to cut interest rates by 25 basis points later in the day, and the market’s focus will be on any clues suggesting the US central bank could skip a cut in December.
Mr. Trump’s victory was also fueling speculation that the Fed might reduce rates at a slower and shallower pace, as his policies on restricting illegal immigration and enacting new tariffs could boost inflation.
Markets now see about a 67% chance the Fed will also cut rates next month, down from 77% on Tuesday, according to the CME Group’s Fed Watch Tool.
The dollar index, which measures the greenback against six major peers, dropped 0.16% to 104.94 after surging to its highest since July 3 at 105.44 and locking in its biggest single-day gains since September 2022 in the previous session.
The yen fell against the greenback to a three-month low of 154.715 — a decline that had Japan’s top currency diplomat Atsushi Mimura flagging readiness to act, marking the government’s strongest warning to speculators in recent months.
The Japanese currency was last 0.36% higher at 154.09 per dollar. — A.M.C. Sy with Reuters
