Peso to move sideways vs dollar before next tariff announcement
THE PESO may continue to move sideways against the dollar this week as investors await the details on the Trump administration’s planned retaliatory tariffs.
The local unit closed at P57.381 per dollar on Friday, inching down by 1.1 centavos from its P57.37 finish on Thursday, Bankers Association of the Philippines data showed.
Week on week, the peso dropped by 5.1 centavos from its P57.33 finish on March 21.
The peso slipped against the dollar on Friday before the release of the US personal consumption expenditures (PCE) price index data later in the day, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The dollar-peso traded sideways as market participants continued to wait for details on Trump’s retaliatory tariffs and ahead of the PCE, which should provide cues on the US Federal Reserve’s monetary path,” a trader said in a phone interview.
US consumer spending rebounded less than expected in February while a measure of underlying prices increased by the most in 13 months, stoking fears the economy was facing a period of tepid growth and high inflation amid an escalation in trade tensions, Reuters reported.
Economists say President Donald J. Trump’s protectionist trade agenda, marked by a rush of tariff action announcements since taking office in January, will boost prices of imported goods and drive inflation higher in the coming months.
The PCE price index increased 0.3% in February after advancing by the same unrevised margin in January and in line with economists’ expectations.
In the 12 months through February, PCE prices increased 2.5%, matching January’s rise.
Before the PCE data release, the dollar was headed for a steady week as concern about tariffs slowing US growth has pushed down US yields, stocks and the currency.
The dollar’s decline over the past few months has confounded market expectations for a higher US currency under Mr. Trump’s tariffs, wiping out long dollar positions and leaving traders unsure how to position or react as he upends trade relations.
For this week, the trader said the peso’s movements will largely depend on the PCE data and the Trump administration’s tariff announcements.
The trader sees the peso moving between P57.20 and P57.60 per dollar this week, while Mr. Ricafort expects it to range from P57.20 to P57.70.
Mr. Trump said on Friday that he was open to carving out deals with countries seeking to avoid US tariffs but those agreements would have to be negotiated after his administration announces reciprocal tariffs on April 2, Reuters reported. — A.M.C. Sy with Reuters
