The peso weakened against the dollar on Monday, March 5, touching the P52 level anew, as market players reduced their position ahead of the February inflation data release on Tuesday, March 6.

The local currency finished at P52 against the greenback on Monday, losing 10 centavos from its P51.90-per-dollar close on Friday.

The peso opened the session up at P51.85 versus the dollar, while its best showing was at P51.83. Its intraday low, meanwhile, was at P52.04 to the greenback.

Traders interviewed over the phone on Monday said the peso moved sideways with a downward bias on the back of position reduction.

“We saw thin volume [today]. I think it’s more of position reduction ahead of the inflation data [today],” the trader said.

According to the BusinessWorld poll of 14 economists, inflation is seen to pick up to 4.2% in February, accelerating faster than the 2-4% full-year target set by the Bangko Sentral ng Pilipinas, as well as the 3.3% figure in February last year.

The economists said the implementation of the Tax Reform for Acceleration and Inclusion law will drive the inflation faster as older inventories are used up.

Although the first tranche of the tax reform reduced personal income taxes, it slapped excise taxes on commodities such as sweetened beverages, tobacco and fuel. This comes at a three-year highs for crude prices.

“But given the volume, it’s not like we’re trending [weaker]. It’s more of sideways movement,” the trader added.

For Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, President Donald J. Trump’s protectionist policies will likely drive the currency exchange.

“Inflation will not be the main driver but the continuing saga of Trump’s protectionist stance,” said Mr. Asuncion in a text message.

Last week, Mr. Trump announced he will slap a 25% tariff on steel imports and a 10% tariff on aluminum imports.

However, Mr. Asuncion noted that “tensions eased a bit due to China’s openness to more discussion about trade.” — Karl Angelo N. Vidal

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