Peso to weaken vs dollar

THE PESO is seen to slide against the dollar this week due to upbeat US economic data as well as the expected interest rate hike by the US Federal Reserve.

On Friday, the local currency strengthened against the greenback, gaining 15 centavos to close at P50.50 on the back of positive sentiment on the government’s tax reform package.

Week on week, however, the peso weakened from its P50.37-per-dollar close last Dec. 1.

This week, analysts expect the peso to drop anew following positive US economic data.

“The dollar might continue to appreciate this week, driven by last Friday’s upbeat US employment reports and expectations of another interest rate hike from the US Federal Reserve on Dec. 14,” Guian Angelo S. Dumalagan, market economist of Land Bank of the Philippines, said in an e-mail over the weekend.

Mr. Dumalagan said the dollar may appreciate as investors react to positive US data ahead of the expected rate hike by the Fed at its policy meeting this week.

US non-farm payrolls rose by 228,000 jobs in November amid broad gains in hiring as distortions from recent hurricanes faded, Labor Department data showed on Friday. The government revised data for October to show the economy adding 244,000 jobs instead of the previously reported 261,000 positions.

“US unemployment rate also remained steady at its lowest level since February 2001, while US inflation is expected to show a stronger reading when it comes out on Wednesday,” Mr. Dumalagan noted. “In their (Fed) policy meeting, US officials might also affirm their prior guidance of three interest rates hikes next year.”

Meanwhile, a trader said the meeting of the European Central Bank (ECB) on