Peso drops on weak GDP report

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THE PESO declined against the dollar anew on Thursday following weaker-than-expected Philippine growth data released yesterday.

The local unit ended yesterday’s session at P52.86 versus the greenback, 11 centavos weaker than the P52.75-per-dollar finish last Wednesday.

The peso opened the session stronger at P52.65 per dollar, reaching a high of P52.64 intraday. However, it closed the session at its worst showing of the day, which was logged at P52.86 versus the greenback.

Dollars traded also slipped to $950.49 million from the $994.29 million that switched hands the previous day.

A foreign exchange trader attributed the weakening of the peso to the gross domestic product (GDP) data released by the Philippine Statistics Authority on Thursday, which came in lower than market expectations.

In 2018, the economy grew at a 6.2% pace year-on-year, missing the already downgraded 6.5-6.9% target band of the government, as elevated inflation last year slowed consumer spending.

This was the slowest pace of expansion seen since 2015’s 5.9% print and also missed the median estimate of 6.3% in a BusinessWorld poll conducted late last week.

The economy meanwhile grew 6.1% in the fourth quarter, slightly faster than the revised 6% GDP growth in the previous quarter, but still slower than the 6.5% pace in the same quarter in 2017.

Another trader said that the peso weakened after the “relatively muted” remarks on the local economy, which also dissuaded demand.

For today, the first trader expects the peso to trade between P52.80 and P53, while the other gave a P52.70-P53 range.

“The local currency might further weaken as expectations of dovish cues from the European Central Bank might propel safe-haven buying towards the greenback,” the second trader noted. — K.A.N. Vidal