THE PESO is expected to strengthen this week as the dollar declined against the other currencies due to weaker-than-expected economic data as well as declining government bond yields.
Last Friday, the peso ended the week at P52.51 versus the greenback, surging by 14 centavos from the P52.65-per-dollar finish last Thursday, following the release of the December inflation data, which came slower than expected.
Week-on-week, the peso strengthened a tad from its P52.58 finish last Dec. 28.
In a text message, Rizal Commercial Banking Corp. economist Michael L. Ricafort said the peso-dollar exchange rate could range between P52.30 and P52.60 this week as the greenback was weaker against other units.
“The US dollar was weaker versus major and emerging market currencies after [the release of the] weaker manufacturing data (biggest drop since 2008) to two-year lows,” Mr. Ricafort said on Friday.
The US Manufacturing Purchasing Managers’ Index was at 53.8 last month, down from the 55.3 recorded in November, amid a “weaker rise in new business and the joint-softest expansion in output since September 2017,” according to IHS Markit.
Mr. Ricafort added that the dollar was also lower compared with major global currencies after the benchmark 10-year US bond yield declined to 2.5%.
“This reduced the interest rate returns on US dollar-denominated bonds as well as the attractiveness of the US currency.”
For this week, he said the market will price in any developments in the US government shutdown as well as the upcoming talks between Washington and Beijing on their trade relations.
On the local front, investors will look at the latest gross international reserves data which will be released today, as well as the trade figures to be released on Jan. 10.
Meanwhile, a foreign exchange trader said the peso could trade stronger against the greenback should the dollar index continue to trade lower amid increased risk appetite among investors.
For this week, the trader expects the peso to trade between P52.45 and P52.65. — Karl Angelo N. Vidal