Peso drops on US CPI report

THE PESO dropped against the dollar on Wednesday amid faster-thanexpected US consumer inflation.

The local unit closed at P55.396 per dollar on Wednesday, weakening by 8.6 centavos from its P55.31 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session sharply weaker at P55.55 against the dollar, which was also its worst showing for the day. Its intraday best was at P55.345 versus the greenback.

Dollars exchanged went down to $1.01 billion on Wednesday from $1.13 billion on Tuesday.

The peso weakened on Wednesday due to the fasterthan-expected US consumer price index (CPI) in February, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

US consumer prices increased solidly in February amid higher costs for gasoline and shelter, suggesting some stickiness in inflation that further diminishes the chances of a Federal Reserve interest rate cut before June, Reuters reported.

The consumer price index rose 0.4% last month after climbing 0.3% in January, the Labor department’s Bureau of Labor Statistics said. Gasoline prices rebounded 3.8% after declining 3.3% in January. Shelter, which includes rents, rose 0.4% after advancing 0.6% in the prior month.

In the 12 months through February, the CPI increased 3.2%, after advancing 3.1% in January.

Economists polled by Reuters had forecast the CPI would gain 0.4% on the month and increase 3.1% on a year-on-year basis. The annual increase in consumer prices has slowed from a peak of 9.1% in June 2022, but progress has stalled in recent months.

For Thursday, a trader said in an e-mail that the peso could depreciate further due to a potential uptick in US retail sales.

The trader sees the peso moving between P55.30 and P55.55 per dollar on Thursday, while Mr. Ricafort expects it to range from P55.30 to P55.50. —