Peso nears P52-per-dollar level

THE PESO dropped further against the dollar on Tuesday, breaching the P52 level intraday, ahead of the release of US January inflation data.

The local currency closed Monday’s trading session at P51.98 versus the dollar, 21 centavos weaker than the P51.77 finish on Friday.

This is the peso’s worst finish in more than 11 years or since it ended at P52.165 against the greenback on July 21, 2006.

The peso traded weaker the whole day, opening the session at P51.93 against the greenback. Its best showing was at P51.84, while it posted a low of P52 versus the dollar intraday.

Dollars traded climbed to $ 1.023 billion from the $ 930.6 million that changed hands in the previous session.

UnionBank of the Philippines chief economist Ruben Carlo O. Asuncion said the weakening of the peso was due to the outlook on US inflation.

The trader shared the same sentiment, saying investors are looking forward to official inflation data from the US, as this can spur more expectations for the US Federal Reserve to hike its rates this year.

In a report from Reuters, expectations on US inflation edged lower in January, according to a New York Fed survey published on Monday.

The survey of consumer expectations dipped to 2.71% in January year on year, slightly lower than the 2.82% the previous month.

The consumer expectations survey is among the data the Fed considers when it reviews policy. Market players expect three interest rate hikes from the Fed this year.

For today, the trader expects the local unit to move between P51.70 and P52.10 against the dollar, while Mr. Asuncion gave a slightly slimmer range of P51.70 to P52.

“Exchange rates are expected to be slightly subdued [ today] amid possible profit taking from the dollar’s recent gains,” the trader noted.

Meanwhile, most other Asian currencies gained ground against the US dollar on Tuesday as global risk sentiment rose after world equities showed a semblance of calm, while the greenback was on the defensive on worries about its receding yield advantage.

Asian stocks rallied on Tuesday, tracking Wall Street’s extended rebound from last week’s steep fall, with MSCI’s broadest index of Asia- Pacific shares outside Japan climbing 1.4%.

“Equity markets have begun the week on a somewhat positive note, picking up from a Friday rebound as bargain hunters have returned on the first sign of stability,” Stephen Innes, head of trading for Asia Pacific at Oanda said in a note.

Meanwhile, the dollar index dipped 0.2%, having fallen 0.26% on Monday.

“The US dollar traded lower as currency traders are analyzing the rebounding global equity markets,” added Mr. Innes. •