THE PESO strengthened against the dollar on Tuesday following upbeat inflation data.
The local unit ended the session yesterday at P51.865 versus the greenback, up six centavos from the P51.925-per-dollar finish last Monday.
The peso opened the session weaker at its intraday low of P52 against the dollar. Meanwhile, its best showing for the day was logged at P51.84 versus the greenback.
Dollars traded climbed to $966.28 million from $770.33 million that switched hands the previous day.
Foreign exchange traders attributed the strengthening of the peso to the domestic inflation report released by the Philippine Statistics Authority yesterday.
“The peso strengthened from market optimism as the softer Philippine inflation report came in within market expectations…” a trader said in an e-mail.
Inflation eased for the sixth straight month in April to three percent, slower than the 3.3% recorded in March.
This settled within the Bangko Sentral ng Pilipinas’ 2.7-3.5% forecast and was a tad slower than the 3.1% median estimate in a BusinessWorld poll.
The slower inflation print was mainly driven by food and non-alcoholic beverages, with all food items posting slower price increases.
This fuelled market expectations for the central bank to cut its interest rates as well as banks’ reserve requirement ratio.
“Since inflation came in better than expected, it gives them more room to ease on Thursday. The market is already pricing in what will happen on Thursday,” another trader said in a phone interview.
For today, the first trader expects the peso to move between P51.75 and P51.95, while the other gave a P51.80-P52.20 range.
“We’ve seen range trading for a few days already. I think the market is still in a wait-and-see mode ahead of the upcoming data,” the second trader noted. — KANV