THE peso strengthened slightly against the dollar on Friday on the back of profit-taking by banks.
The currency ended the week at P51.90, two centavos stronger than the P51.92 finish on Thursday.
The peso opened at P51.84 against the dollar, hitting an intraday high of P51.785, while the low was P51.92.
Trading volume was $733.3 million on Friday, down from $863.5 million booked the previous session.
A trader said in a phone interview that the peso moved sideways.
“We saw a lot of banks buying close to the P51.80 and P51.85 levels,” the trader said, adding that he didn’t see the central bank intervening during the session.
The Bangko Sentral ng Pilipinas sometimes conducts “tactical intervention” to temper sharp swings that may cause the peso to appreciate or depreciate.
Meanwhile, another trader said: “The peso strengthened [Friday, March 2] amid a softer US economic outlook from the Fed Chairman Powell in his testimony to the US Senate.”
Federal Reserve Chair Jerome H. Powell’s remarks were taken to mean a softening in his hawkish position on the second day of his testimony before the US Congress, after he said the economy is not overheating, though the market continues to expect four interest rate hikes this year.
Meanwhile, the Finance Department said the movement of the peso was in line with the other Asian currencies and that it should not be taken as a sign of economic weakness.
“The exchange rate of the Philippine peso is just moving in line with Asian currencies, maintaining the competitiveness of the economy and sustaining its rapid growth,” the Department of Finance (DoF) said in an economic bulletin sent on Friday, adding that its weakening in the first two months of the year was a correction from the previous appreciations.
According to an analysis presented by the DoF, the peso strengthened 7.3% from the end of 2004 to P52.16 at the end of February 2018.
The peso’s appreciation was the fifth-strongest of 12 Asian currencies during the period, lagging the yuan, the Singapore dollar, the baht and the Taiwan dollar. During the period, the 12 currencies as a group depreciated 5.65%.
The peso appreciated 25.38% against the dollar in the period from December 2007 to February 2018. During the period, the 12 currencies weakened 13.51% as a group.
The DoF added that the exchange rate movement should not be taken as a sign of the structural weakness in the economy.
“In an environment where macroeconomic fundamentals are sound… it is best that the exchange rate should move flexibly so that economic players are able to adjust promptly to market dynamics, thus sustaining economic growth,” the department said.
The agency also cited the Philippines’ above-6% real gross domestic product growth, inflation staying within the projected levels, an eight-month buffer of international reserves, financeable balance of payments and fiscal deficits as well as declining debt ratios as indicators of a sound economy. — Karl Angelo N. Vidal