Peso may weaken on data

THE PESO may weaken against the dollar on expectations of weak local manufacturing data and better US jobs numbers. — BW FILE PHOTO

THE PESO may depreciate further versus the greenback this week on expectations of positive US jobs data and weaker local manufacturing activity due to supply chain disruptions.

The local unit ended trading at P50.43 versus the dollar on Friday, depreciating by four centavos from its P50.39 close on Thursday, based on data from the Bankers Association of the Philippines.

Week on week, it also lost two centavos from its P50.41-per-dollar finish on Nov. 19.

The peso weakened due to concerns over increasing coronavirus infections in some countries, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The newly detected variant in South Africa also resulted in cautious sentiment, making investors flock to the safe-haven dollar, he added.

Some European countries have seen an uptick in cases in the previous weeks. Austria has already reinstated lockdown measures, while Germany may follow suit.

Meanwhile, the World Health Organization on Friday identified the Omicron first detected in South Africa as a variant of concern as it has a large number of mutations and an increased risk of reinfection.

The variant has already been detected in other parts of the world, including Europe, Israel, and Hong Kong.

The hawkish minutes of the latest US Federal Reserve meeting also caused the peso to depreciate last week, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

The minutes for the Fed’s November policy review released Wednesday showed many officials believe the US central bank should be prepared for a quicker tapering of asset purchases if inflation remains elevated, Reuters reported.

Mr. Asuncion said the peso may continue to weaken this week on expectations of weak local manufacturing data due to supply chain disruptions.

IHS Markit will release the November Philippine Purchasing Managers’ Index (PMI) on Dec. 1. In October, the country’s PMI reading increased to 51 from 50.9 in September, still above the 50 mark that separates expansion from contraction.

Meanwhile, Mr. Ricafort said the market will also take cues from US jobs data.

The US Labor department will release the nonfarm payrolls report for November on Friday. Last month, nonfarm payrolls increased by 531,000 from the 312,000 jobs created in September.

For this week, Mr. Asuncion gave a forecast range of P50.20 to P50.60 per dollar, while Mr. Ricafort expects the local unit to move within P50.20 to P50.60. — L.W.T. Noble with Reuters