THE PESO is seen to strengthen this week on the back of expectations of strong fourth-quarter economic growth.
The local unit finished trading at P50.891 per dollar on Friday, depreciating by six centavos from its P50.831 close on Thursday, according to data from the website of the Bankers’ Association of the Philippines.
It also weakened by 23.1 centavos from its P50.66-per-dollar finish on Jan. 10.
The sideways trading seen for the day was due to the lack of local leads, according to UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.
Meanwhile, a trader said the slightly weaker peso performance was on the back of a “disappointing” phase one trade deal between the Washington and US on Jan. 15.
“I think there’s a little bit more disappointment that there wasn’t more clarity to some parts of the deal. Moving forward now, that there are questions for the phase 2 deal,” the trader said.
Reuters reported that among the provisions of the landmark deal is the reduction of US tariff on Chinese goods in exchange for China’s commitment to buy additional $200 billion worth of products including agricultural, energy, and manufactured goods for the next two years.
For this week, Mr. Asuncion said the market will be on the lookout mainly for data inon the country’s fourth quarter (Q4) and 2019 gross domestic product (GDP) growth set to be released by the Philippine Statistics Authority on Jan. 23.
“This would be the biggest market driver. Q4 economic growth is expected to be at least six percent and would likely strengthen the peso,” he said.
The economy grew by 6.2% in the third quarter of 2019, bringing the GDP growth average for the first nine months of the year to 5.8%.
Fourth-quarter GDP growth needs to hit at least 6.7% in order for the full-year figure to hit the minimum target of six percent set by the government.
Meanwhile, the trader said other key factors for trading this week would be demand for dollars and news on the US-China trade talks.
“There will be dollar demand, corporate demand…And we’ll look into developments of US-China…probably phase two deal,” the trader said.
Mr. Asuncion sees the peso trading at P50.50-50.90, while the trader gave a range of P50.70-P51.20. — L.W.T. Noble with Reuters