THE peso weakened on Tuesday as market players take positions ahead of the third quarter US gross domestic product (GDP) data to be released on Friday.
The local currency closed at P51.54 versus the greenback on Tuesday, losing three centavos from the P51.51 per dollar finish the previous day.
The peso opened on a stronger note at P51.46, even reaching P51.45 as its peak for the day. Its intraday low, however, clocked in at P51.61.
Investors traded $551.2 million during Tuesday’s session, from $439 million exchanged the previous day.
A trader said the peso’s weakening was due to the market betting on stronger third quarter GDP growth for the US, affirming a December Federal Reserve rate hike.
“They are betting on strong economic growth, so it may be a weaker peso,” a trader said in a phone interview, noting the local pair may even test the year-to-date resistance of P51.63.
“I feel like the move will basically try the resistance, and then we’ll see. But it won’t be easy as the Bangko Sentral ng Pilipinas will be there,” he said, adding the peso may reach P52 once the US GDP data comes out.
Guian Angelo S. Dumalagan, market economist of the Land Bank of the Philippines, said in an e-mail that the peso weakened as markets are still expecting a US Federal Reserve rate hike by yearend despite caution over the US economic growth data.
According to the US Bureau of Economic Analysis’ Web site, third quarter GDP growth figures will be released on Oct. 27.
“The peso moved sideways today amid uncertainties abroad. The peso initially appreciated due to profit taking, but fell towards the end of the day, as the dollar bounced back amid continued expectations of another US rate hike this year,” said Mr. Dumalagan.
“Market movements were limited due to caution ahead of the ECB (European Central Bank) interest rate decision and the third-quarter growth of the US,” he added.
Mr. Dumalagan forecasts the local pair may move between the P51.40 to P51.60 range in today’s trading session.
“There might be a bias in favor of the peso due to profit taking amid mixed US reports on services and manufacturing and caution ahead of the ECB monetary policy meeting (on Oct. 26),” he added.
The trader, on the other hand, sees a P51.30 to a P51.50. – Elijah Joseph C. Tubayan