Peso returns to P50:$1 on strong Q3 GDP data

THE PESO returned to the P50per-dollar level on Thursday on the back of the country’s strongerthan-expected third quarter gross domestic product (GDP) growth print.

The local currency closed at P50.90 against the greenback yesterday, gaining 14 centavos from its P51.04 finish on Wednesday.

This was the best close of the peso in more than a month or since Sept. 29’s P50.815.

The peso opened stronger at P51, which was its intraday low as well. Meanwhile, yesterday’s best showing was at P50.85 against the greenback.

Dollars traded surged to $885.1 million from Wednesday’s $566.8 million.

Traders interviewed said the peso strengthened on the back of the upbeat Philippine GDP growth print for the third quarter.

“The dollar traded lower due to the higher-than-expected GDP. That’s the reason why the peso appreciated today,” a trader said over the phone on Thursday, noting that the low trading volume the previous session was driven by the anticipation of the economic data.

The economy, as measured by GDP, grew by 6.9% in the third quarter, according to a report released by the Philippine Statistics Authority yesterday.

“When [the GDP growth rate] came out, it traded as [ high] as P50.855 before some profit taking and some importers buying at these level below the P51 figure,” the trader added.

Another trader added that the stronger peso was driven by the poor greenback as the markets are still reacting to the weak US economic data on consumer price and retail sales which was released earlier this week.

Traders are expecting the peso to trade between P50.80 and P51 against the dollar today, while another trader gave a wider range of P50.80 to P51.20, noting that the greenback might rise on strong US data on industrial production and initial jobless claims.

Meanwhile, Most Asian currencies weakened on Thursday as the US dollar firmed, boosted by solid US data though its gains were capped by doubts over the prospects for US tax reform.

Data out on Wednesday showed that US underlying consumer prices rose in October, supporting the idea that a recent disinflationary trend that had worried the Federal Reserve had ended. There was also an unexpected rise in retail sales last month.

But dollar strength was limited by uncertainty over a Senate Republican tax plan that drew fire from two Republican lawmakers on Wednesday in what could be a sign of trouble for the sweeping measure. with