THE PESO inched higher on Thursday as the market saw profit-taking ahead of the release of United States’ gross domestic product (GDP) data.
The local currency closed at P50.98 against the greenback yesterday, stronger by four centavos from the P51.02-per-dollar finish logged during Wednesday’s session.
The peso weakened to P51.05 as the market opened. Its peak for the day was P50.97, while its intraday low stood at P51.165 versus the greenback.
Dollars exchanged hands surged to $881.5 million from $684.7 million recorded the previous day.
Market analysts said traders took profits following the dollar’s strength ahead of the GDP data release scheduled later in the day.
“Well basically, there’s GDP figures in the US. So people are just squaring off. They feel like the dollar was too big so they took profit before the figure,” a trader said in a phone interview, hinting that there may be an upward adjustment on GDP.
This is despite the ongoing tension between US and North Korea, which could have strengthened the dollar on safe-haven buying.
“The market is going back to economics. They are looking at the figures. Those geopolitical events, those are just blips,” the trader said.
“But if you really look at the numbers, that’s where it matters,” the trader added.
Another trader concurred, saying on Thursday: “We saw profit taking today after three straight days of gains.
For today, Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines, said the exchange rate “may still move within the same range as the previous session but with a downward tilt to the local currency.”
“The peso might depreciate anew amid bets of strong US GDP growth data and likely hawkish remarks from other Fed officials,” he said in an e-mail.
The second trader likewise said that the local pair will be range bound, as the final GDP estimate will “most likely see minimal change.”
Mr. Dumalagan forecasts a P50.90 to P51.20 per dollar range today, while the other traders both see the peso trading between P50.90 to P51.10.
ASIAN UNITS DOWN
In contrast, other Asian currencies took a beating on Thursday after US President Donald J. Trump’s proposal for a tax overhaul lifted the dollar and US bond yields, reducing the appeal of regional currencies.
The dollar index, which measures the greenback against a basket of six major currencies, climbed to a one-month high of 93.575, while the US 10-year Treasury yield rose to its highest since July 13 at 2.3425%.
Mr. Trump on Wednesday proposed the biggest US tax overhaul in three decades, offering to cut taxes for most Americans but prompting criticism that the plan favors the rich and companies and could add trillions of dollars to the deficit.
The jump in US bond yields reduced the yield margin for investors buying Asian bonds over US Treasuries. — Elijah Joseph C. Tubayan with Reuters