Peso up ahead of inflation report
THE PESO rebounded slightly on Tuesday as the market waits for the release of local inflation data and as the dollar weakened due to positive developments in Germany.
The local unit ended at P53.375 against the greenback on Tuesday, strengthening by 5.5 centavos from its P53.43- perdollar finish on Monday.
The peso opened the session slightly weaker at P53.44 versus the greenback, logging an intraday low of P53.485. Its best showing meanwhile stood at P53.37 per dollar.
Dollars traded rose to $511.5 million from the $467.85 million logged the previous day.
UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the peso’s strength on Tuesday “probably came from an expectation of easing inflation.”
“Inflation has been easing month on month. [ We can see that] momentum is slowing,” Mr. Asuncion said in a text message.
In a BusinessWorld poll, economists gave a median forecast of 4.7% for the month of June. If realized, the inflation print will accelerate from May’s 4.6% print to a fresh five-year low. This consensus also falls in the middle of the 4.35.1% inflation estimate given by the central bank on Friday.
Mr. Asuncion noted one of the main factors that could have kept inflation in check is lower fuel and electricity costs.
Meanwhile, a foreign exchange trader attributed the strengthening of the peso to a weaker greenback overseas.
“The peso closed stronger today as positive news from the Euro zone concerning an agreed migration stance boosted the euro against the greenback,” the trader said in an e- mail on Tuesday.
The German government’s conservatives have settled a row over illegal immigration that threatened to topple Chancellor Angela Merkel’s governing coalition, Reuters reported.
The trader noted that the peso opened the session weaker as trade concerns continue to linger among investors.
For Wednesday, the trader expects the peso to move between P53.20 and P53.40 versus the dollar, while Mr. Asuncion gave a weaker P53.30-P53.50 range.
“The peso might continue appreciating [ today] as investors might secure gains ahead of the official release of inflation figures on Thursday,” the trader noted.