Peso seen moving sideways versus dollar

THE PESO is seen to move sideways against the dollar for the rest of the week due to mixed signals locally and abroad.

On Monday, the peso declined to P52.14 versus the greenback from Friday’s P52.10 finish following the better-than-expected jobs report in the United States.

In an e-mail, a market analyst said the dollar is seen to move sideways with an upward bias on Wednesday until the end of the week “amid mixed signals” domestically and offshore.

“Locally, the softer-than-expected inflation for March 2019…gives the BSP (Bangko Sentral ng Pilipinas) more room to cut policy rates this year and accelerate the reduction in the reserve requirement ratio,” the analyst said.

Last week, the Philippine Statistics Authority reported that inflation was at 3.3% in March, marking the fifth straight month of easing and slower than the 3.8% print in February.

Market participants said the slower inflation print last month gives the central bank leeway to adjust key interest rates and big banks’ reserve requirements.

However, BSP officials said the central bank still needs to be cautious in setting interest rates in the context of a global economic slowdown as well as the El Niño episode.

“Likewise, in the US and the Eurozone, developments are expected to amplify dovish policy expectations and fuel concerns on slowing global growth,” the analyst added.

The European Central Bank is expected to affirm its view of steady policy rates this year, as it might continue to flag concerns on slowing growth.

On the other hand, the minutes of the March meeting of the US Federal Reserve as well as speeches of various central bank officials might echo a dovish tone.

During their March meeting, the rate-setting Federal Open Market Committee opted to keep federal funds rate steady, signalling that no more rate hikes will be coming for the rest of the year.

According to a Reuters poll taken last month, the US Federal Reserve is done raising interest rates until at least the end of next year. Economists gave a 40%chance of at least one rate cut by end-2020.

For this week, the analyst expects the peso to move between P51.90 and P52.60, while a foreign currency trader gave a P52-P52.50 range. — KANV with Reuters