Peso down as market eyes inflation data

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THE PESO weakened against the dollar on Monday as market players anticipate the September inflation print, which is seen to pick up further.

The local unit ended Monday’s session at P54.11 versus the greenback, nine centavos weaker than the P54.02-per-dollar finish last Friday.

The peso traded weaker the whole day, opening the session at P54.03 against the dollar, which was its best showing for the day. Meanwhile, its intraday low stood at P54.13 versus the greenback.

Dollars traded thinned to $385.7 million from the $699.7 million tallied the previous session.

A foreign exchange trader said the peso consolidated on Monday as the dollar strengthened Friday night.

“Dollar was in general was trading higher against major currencies. We’re just following the move contrary to the move on Friday wherein the peso strengthened. However, because of the dollar’s move last Friday night, the dollar strengthened a bit,” the trader said in a phone interview.

Going forward, the trader said inflation will be a major factor for the peso.

“I think inflation will be a major factor. That may give a little bit of room for the peso just to consolidate and see if it will go higher or lower.”

A faster September inflation print is expected by the market. A BusinessWorld poll among 13 economists yielded a 6.8% median rate, which if realized would be faster than August’s 6.4% print.

It matches the estimate given by the BSP last Friday, but is faster than the 6.4% expected by the Department of Finance.

“We’ll consolidate. This is a test where [we’ll] see if the peso can appreciate more in the coming days after the (Bangko Sentral ng Pilipinas) hike,” the trader added.

“Market is anticipating a 6.8% consensus September inflation level,” UnionBank of the Philippines chief economist Ruben Carlo O. Asuncion said in a text message. “This may be dampening prospects after the recent rate hike.”

He added that the new trade pact between the United States and Canada “didn’t seem to have any impact.”

In a Reuters report, Canada and the US forged a last-minute deal on Sunday to save the North American Free Trade Agreement as a trilateral agreement with Mexico.

For Tuesday, the trader said the peso will likely move between P54 and P54.20 versus the dollar, while Mr. Asuncion gave a P54-P54.40 range. — Karl Angelo N. Vidal