Peso sinks to P52:$1 level anew
THE PESO weakened against the dollar on Monday, touching the P52 level anew, as market players reduced their position ahead of the February inflation data release today.
The local currency finished at P52 against the greenback yesterday, losing 10 centavos from its P51.90- per- dollar close last Friday.
The peso opened the session up at P51.85 versus the dollar, while its best showing was at P51.83. Its intraday low, meanwhile, was at P52.04 to the greenback.
Dollars traded dropped to $565.5 million on Tuesday from the $733.3 million that changed hands in the previous session.
Traders interviewed over the phone yesterday said the peso moved sideways with a downward bias due to position reduction.
“We saw thin volume [ yesterday]. I think it’s more of position reduction ahead of the inflation data [ today],” the trader said yesterday.
Inflation likely picked up further in February as prices of food, fuel and electricity rose on the back of tax reform, analysts said in a Business World poll, with bets for a rate hike from the central bank now piling.
A poll among 14 economists yielded a 4.2% median forecast for the month, with 10 analysts saying that the pace of price increases went faster than the four percent rate seen in January. If realized, this would likewise surge from the 3.3% rate in February 2017, and would surpass the 2-4% target set by the Bangko Sentral ng Pilipinas (BSP).
This falls within the 4-4.8% forecast range given by the BSP’s Department of Economic Research, and will be the fastest since the 4.3% pace tallied in October 2014.
Yesterday, the Department of Finance also said prices may have edged higher to hit 4.1% last month.
For Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, President Donald J. Trump’s protectionist policies will likely drive foreign exchange trading.
However, Mr. Asuncion noted that “tensions eased a bit due to China’s openness to more discussion about trade.”
For today, the trader expects the peso to move between P51.90 and P52.10, while another trader gave a slightly wider range of P51.80 to P52.05. •