Peso up on US GDP revision

THE PESO gained against the dollar on Thursday following the slight downward revision in US gross domestic product (GDP) data.

The local unit closed at P56.20 per dollar on Thursday, strengthening by five centavos from its P56.25 finish on Wednesday, Bankers Association of the Philippines data showed.

The peso opened Thursday’s session stronger at P56.22 against the dollar. Its weakest showing was at P56.23, while its intraday best was at P56.12 versus the greenback.

Dollars exchanged rose to $1.28 billion on Thursday from $1.12 billion on Wednesday.

“The peso recovered following the downward revision in the fourth-quarter US GDP report,” a trader said in an e-mail.

US economic growth in the fourth quarter was lowered slightly, but its composition was much stronger than initially thought, which bodes well for the near-term outlook even as activity got off to a weak start because of freezing temperatures, Reuters reported.

The Commerce department’s slight downward revision to gross domestic product growth on Wednesday reflected a downgrade to inventory investment. There were upgrades to consumer spending, state and local government investment as well as residential and business outlays.

GDP increased at a 3.2% annualized rate last quarter, revised slightly down from the previously reported 3.3% pace, the Commerce department’s Bureau of Economic Analysis said in its second estimate of fourth-quarter GDP growth.

Economists polled by Reuters had expected GDP growth would be unrevised.

The peso was supported by a generally weaker dollar on Thursday ahead of the release of the US personal consumption expenditures (PCE) price index report, which is the Federal Reserve’s preferred inflation gauge, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Friday, the trader said the peso may weaken due to the PCE data.

The trader sees the peso moving between P56.05 and P56.30 per dollar on Friday, while Mr. Ricafort expects it to range from P56.10 to P56.30. — AMCS