THE PESO is seen to strengthen further against the dollar as easing inflation expectations following the policy tightening of the Bangko Sentral ng Pilipinas (BSP), as well as dovish remarks from a US central bank official, will likely support the local currency.
On Friday, the peso ended the week at P52.715 versus the greenback, up from its P52.805 finish the previous day, as the market reacted to the central bank’s policy tightening.
Week on week, the peso also strengthened from its P52.96-per-dollar finish on Nov. 9.
Michael L. Ricafort, economist at Rizal Commercial Banking Corp., said “relatively lower” global oil prices as well as easing inflationary pressures and expectations following the BSP’s rate hike will continue to support further gains in the local unit.
The central bank’s policy-setting Monetary Board raised policy rates by 25 basis points on Thursday, marking its fifth consecutive tightening move this year, amid lingering upside risks to inflation.
Inflation steadied in October as it matched September’s 6.7% print, a nine-year high.
Aside from lower petroleum prices and easing inflation expectations, Mr. Ricafort said dovish signals from some Fed officials regarding the US economy may also support the peso this week.
Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said the dollar may depreciate further in the first two days of the week as Fed Vice Chairman Richard Clarida acknowledged signs of slowing global growth which may affect the US economy.
Towards the end of the week, Mr. Dumalagan said the greenback may move with an upward bias amid likely upbeat US economic data on building permits as well as housing, but may be capped by likely soft print on US durable goods orders.
For this week, Mr. Ricafort expects the peso to trade between P52.40 and P52.70, while Ruben Carlo O. Asuncion, UnionBank of the Philippines chief economist, gave a P52.20-P52.60 forecast. Mr. Dumalagan gave a P52.50-P53.10 range. — Karl Angelo N. Vidal