THE PESO maintained its strength yesterday to log a five-month high, supported by big fund inflows even as Philippine economic growth clocked in slower than expected.
The peso closed at P52.57 against the dollar on Thursday, shaving off 38 centavos from the P52.95 finish logged the previous day. This marked the fifth straight session when the peso appreciated versus the dollar.
The local unit traded generally stronger as it opened at P52.83, even touching a low of P52.485 throughout the session. It briefly touched P52.85 as its intraday high before settling at the closing rate.
Two currency traders attributed the sustained appreciation of the peso to renewed market optimism regarding inflation, boosted by equity inflows from offshore investors.
Dollars traded yesterday reached $1.353 billion, slightly lower than the $1.447 billion on Wednesday.
“They are saying there’s an inflow for San Miguel Corp., maybe since last week,” one trader said, referring to the conglomerate’s follow-on offering for its food and beverage unit worth P39.19 billion which concluded recently.
The trader said the dollar-peso pair has been moving lower, but these equity inflows observed towards the recent long weekend “exaggerated” the peso’s recovery.
A second trader pointed out that additional inflows likely came from remittances of overseas Filipino workers, which in turn helped boost the peso.
“The peso strength for now is due to yearend remittances. It can also be attributed to the market view that inflation has tapered down,” the second trader said, referring to the steady 6.7% print in October which was announced on Tuesday.
On the other hand, the trader said the third-quarter economic growth rate of 6.1% may have been treated as a “non-event” by investors even if it slowed from the upward-revised 6.2% pace in the second quarter.
The trader said the latest result is close to the market’s 6.2% consensus rate. A BusinessWorld poll among 15 economists yielded a 6.3% median forecast for the July-September period.
For Friday, both traders said the market will be looking to the United States as the Federal Reserve concludes its two-day policy meeting.
“For the Federal Open Market Committee, it has been priced in that there is more of a hawkish tone. Any event other than that might also move the dollar-peso,” the second trader noted.
Investors widely expect the Fed to raise interest rates by another 25 basis points during their December meeting, picking up cues from previous statements made by US policy makers.
The first trader expects the peso to trade between P52.50 to P52.80 today, while the second sees a P52.55-P52.85 range. — Melissa Luz T. Lopez