THE PESO strengthened to its best level in three months on Tuesday, as the inflation print for October released yesterday was as expected, supported by remittance flows.
The local currency closed at P53.025 versus the greenback on Tuesday, gaining 19.5 centavos from the P53.22 close on Monday. Its close was also its best showing yesterday.
This is the peso’s strongest finish since the P53.01-per-dollar rate logged on Aug. 8.
The peso strengthened a notch at the start of the session, opening at P53.21 per dollar. It dropped to as low as P53.26 against the greenback.
The volume of dollars traded was larger yesterday at $983.78 million from $742.25 million in the previous trading day.
A trader interviewed after the market’s close said positive sentiment in the foreign exchange came after the release of inflation data, which was largely within expectations.
Inflation printed at 6.7% in October, steady from September but surging from 3.1% a year ago, the Philippine Statistics Authority reported yesterday.
This also matched the median forecast from 15 economists tapped in a BusinessWorld poll and falls within the 6.2-7% range given by the Bangko Sentral ng Pilipinas (BSP), but is faster than the 6.5% estimate from the Department of Finance.
“The latest data showed that inflation has already peaked in October, the start of the fourth quarter, as anticipated by the government. This sends a good signal to the market that the government is on track with its anti-inflation measures that made a positive impact on the foreign exchange,” the trader said in a phone interview, citing the interest rate hikes worth 150 basis points from the BSP since May.
Apart from the policy tightening, the trader also noted of the government’s administrative and memorandum orders to boost food supply and streamline its distribution.
However, another trader said the stronger peso was due to inflows, as the seasonal pickup in overseas Filipino remittances is starting to be seen given the proximity to the holidays.
“For the spot, it’s really all due to inflows and not really the inflation print since the market already priced that in, and the US trader weaker across the board,” the second trader said in a separate phone interview, noting lack of fresh leads abroad.
The trader said the same scenario will likely occur in the succeeding months.
“So yearend we’re gonna see more demand for the peso with the influx of remittances,” the second trader said. — E.J.C. Tubayan