THE PESO moved sideways against the dollar on Monday ahead of a slew of economic data and following the World Bank’s downward adjustment of its growth forecast for the Philippines for this year.
The peso closed yesterday’s session at P52.505 versus the greenback, barely moving from the P52.50-per-dollar finish on Friday.
The peso opened the session weaker at P52.60 per dollar, which was yesterday’s worst showing. Meanwhile, its intraday high stood at P52.47 against the US currency.
Trading volume thinned to $801.52 million from the $901.77 million that switched hands in the previous session.
A foreign exchange trader said trading was “very quiet” yesterday as volume thinned.
“The market was just awaiting more details for this week because we have a lot of data coming in. We have CPI (consumer price index) data later in the week,” the trader said in a phone interview yesterday.
Analysts said in a BusinessWorld poll that inflation likely maintained its descent in March as rice and food costs propped further, yielding a median estimate of 3.5%.
If realized, this will be slower than February’s 3.8% pace. This will keep inflation on a downtrend for the fifth straight month.
Apart from local inflation data, the trader added that the market is also anticipating unemployment figures in the US as well as developments in the US-China trade negotiations.
Meanwhile, another trader said the peso depreciated versus the greenback after the World Bank trimmed down its Philippine growth outlook for 2019.
The multilateral lender expects the country’s gross domestic product to grow 6.4% in 2019, a percentage point slower than its December 2018 estimate.
The World Bank flagged the risks of a mild El Niño, which is expected to cut farm output, as well as the delays in the 2019 national budget.
The country’s economic managers were forced to slash their growth target to 6-7% for 2019 from 7-8% previously. Socioeconomic Planning Secretary Ernesto M. Pernia said a budget deadlock that lasts until April will bring down full-year growth to 6.1-6.3%, well under the government’s original 7-8% target and likely level with the 2018 pace of 6.2%.
The government is currently operating on a reenacted 2018 budget, which leaves new programs and even the state’s big-ticket infrastructure projects unfunded.
“When the news came out, we saw a weak peso naturally. We also saw the local stock market falling. But the market just brushed it off. I think the market is just being cautious ahead of the data that will come out this week,” the first trader noted.
For today, traders expect the peso to trade between P52.40 and P52.60 versus the dollar. — Karl Angelo N. Vidal