Peso hits two-month low on weak GDP data

THE PESO plunged against the dollar as it breached the P51 level on the back of slower-than-expected fourth-quarter Philippine economic growth and the end of the threeday US government shutdown.

The local currency ended Tuesday’s session at P51.10 versus the greenback, 26.5 centavos weaker than its P50.835-per-dollar close on Monday.

This is the peso’s weakest close in more than two months or since it closed at P51.18 per dollar last Nov. 14.

The peso opened yesterday’s session slightly stronger at P50.82 versus the dollar, while its intraday high stood at P50.80. The peso’s worst showing, meanwhile, landed at P51.145 against the greenback.

Dollars traded rose to $ 878.5 million from the $ 868.5 million that changed hands in the previous session.

“The peso depreciated strongly following the weaker Philippine fourth-quarter GDP (gross domestic product) data, finally breaching the 51-peso level today,” a trader said in an e-mail yesterday.

The Philippine Statistics Authority reported on Tuesday the Philippine economy grew 6.6% in the fourth quarter of 2017, slower than the revised 7% GDP data in the JulySeptember period and the 6.7% median estimate in a BusinessWorld poll.

The full-year GDP stood at 6.7%, within the lower end of the government’s 6.5-7.5% target.

“The GDP numbers caused the dollar-peso trading to [plunge] to a [low] of P51.145 before we saw some profit-taking ahead of the close,” another trader said.

“We saw some Bangko Sentral ng Pilipinas (BSP) intervention, they provided some liquidity to smoothen the volatility.”

Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, said the peso’s weakness is not necessarily bad but rather good in the long- run.

“A weaker peso is better in the long-run and not a concern in the short-run, where you would expect constant volatility,” he said.

Mr. Asuncion added the end of the US government shutdown further dampened the market’s sentiment over the peso.

“I think so, too. But that sentiment will be short-lived since the US will have to deal with it again by Feb. 8,” he said.

US President Donald J. Trump on Monday evening ( US time) signed a bill that will fund the federal government until Feb. 8.

For today, the traders expect the peso will move between P51 and P51.30, while Mr. Asuncion gave a higher range of P51.10 to P51.40. —