Peso to weaken further
THE PESO may weaken further versus the dollar this week amid increased volatility as focus turns to US President Donald J. Trump’s first major speech and the release of more data from the world’s largest economy that may hint on the likelihood of an interest rate hike there.
The local unit closed at P50.215 against the greenback last Friday, almost flat from the day before but weaker than its P50-per-dollar finish last Feb. 17 after the Federal Reserve released the minutes of its Jan. 31 to Feb. 1 meeting.
“The peso might depreciate further [this] week due to expectations that President Trump would provide more details about his tax plan during his speech before US Congress on February 28,” said Land Bank of the Philippines Market Economist Guian Angelo S. Dumalagan, projecting the local currency to range between P50.10 and 50.50 per dollar.
According to the economist, volatility may increase this week due to “likely mixed, yet balanced” data from the US.
“US economic reports on durable goods orders, personal income and core PCE (personal consumption expenditure) inflation might improve, coun-
teracting likely softer readings on personal spending, manufacturing and GDP ( gross domestic product) growth,” said Mr. Dumalagan.
“The major factors that could reverse the peso’s projected depreciation include a significant downward revision in US GDP growth and absence of fresh details from President Tump about his tax plan,” said Mr. Dumalagan.
According to the economist, the peso might appreciate if Mr. Trump fails to provide a clear picture of his policies during his speech since investors will be tuning in for some guidance regarding what Mr. Trump called his “phenomenal” tax plan.
One trader echoed Mr. Dumalagan’s forecast, saying the local currency is expect to weaken further this week.
“The break of P50 is significant so we should head higher,” the trader said.
Meanwhile, a report by BDO Unibank, Inc. said the currency to is expected to range within the P50.00– 50.25 levels this week.
According to BDO, only a break below P50 will suggest a market consolidation back within the P49.80-50 levels.