THE PESO may strengthen this week as investors position ahead of the release of key economic data.
The local unit ended last week at P51.85 versus the greenback, two centavos stronger than its previous close, amid quiet trading ahead of the US non-farm payrolls data release.
Week on week, the peso strengthened from its P52.18-per-dollar finish last April 26.
Michael L. Ricafort, Rizal Commercial Banking Corp. economist, said the peso may continue to strengthen this week on the back of a one-month low in global crude prices and possible slower inflation for the month of April.
Inflation likely eased further in April due to cheaper rice costs. A BusinessWorld poll conducted last week yielded a 3.1% median rate, falling within the Bangko Sentral ng Pilipinas’ (BSP) 2.7-3.5% forecast range.
“The peso may also gain amid possible further easing of inflation, in view of the latest inflation data due on May 7,” Mr. Ricafort said.
He added that other cues for the peso this coming week include the first-quarter gross domestic product (GDP) growth data and the monetary policy decision of the central bank on Thursday.
A market analyst said in an e-mail that the dollar is expected to trim its gains towards the end of the week following its initial ascent amid “potentially stronger” Philippine GDP growth in the first quarter, a market analyst said in an e-mail yesterday.
The analyst projected a 6.5% economic expansion, compared with the 6.1% median in a BusinessWorld poll of 20 economists, which if realized would be slower than the 6.3% growth the previous quarter, dragged by the effects of the delayed 2019 national budget.
Mr. Ricafort also noted that the peso may continue to benefit from the recent credit rating upgrade of the country by S&P Global Ratings at “BBB+” from “BBB.
However, the market analyst added that the greenback will likely strengthen versus the peso due to an upbeat US labor report. The US economy added 236,000 jobs last month, beating March’s level of 189,000. Meanwhile, the unemployment rate in April came better than expected at 3.6%.
For this week, Mr. Ricafort expects the peso to move between P51.70 and P52, while the market watcher gave a wider P51.50-P52.20 range. — Karl Angelo N. Vidal