Peso weakens on good US data
THE PESO closed weaker than the dollar, returning to the P47 level, as the upwardly revised gross domestic product (GDP) print of the United States boosted the foreign currency yesterday.
The local unit gave up 12.5 centavos to end Wednesday’s trading at P47.02 per dollar from its previous finish of P46.895 versus the foreign unit.
The peso opened trading at P46.87 against the greenback. It hit a high of P46.82-to-the-dollar and dropped to as low as P47.06 versus the foreign unit.
Volume at the foreign exchange market fell to $705 million from the previous session’s $883 million, data from the Philippine Dealing System showed.
“The peso depreciated due to better-than-expected US reports on consumer confidence and first-quarter GDP growth rate,” a trader interviewed by phone said yesterday.
“Weak US PCE inflation in the first quarter may have limited the peso’s weakness. Investors are still generally concerned about the potential impact of Britain on the global economy.”
Another trader said: “Investors were generally surprised to see the US economy balloon 1.1% in the first quarter boosting sentiment for the foreign unit and causing the peso to return to the P47 level.”
‘BREXIT’
“There was also lingering concerns over the implications of the recent ‘Brexit’ to the rest of the world making safe haven assets the investment of choice,” the trader added.
US GDP increased at a 1.1% annual rate in the first quarter, rather than the 0.8% pace reported last month, the Commerce Department said in its third GDP estimate.
The economy grew at a rate of 1.4% in the fourth quarter.
Consumer confidence in the United States was also up rising to 98 from 92.4 in May. However, the cutoff date was June 16, a week before the British referendum occurred which jolted financial markets.
For today, a trader said the peso may strengthen due to expectations of weak US reports on pending home sales, personal spending and PCE inflation in May 2016. “These data together with easing concerns over ‘Brexit’ may further support the peso’s appreciation by reducing the dollar’s allure.”
A trader said the exchange rate is expected to move within the P46.90 to P47.10 range, while another trader put the support at P46.95 and the resistance at P47.15 versus the foreign unit today.
In contrast, most emerging Asian currencies extended gains on Wednesday as the immediate shock from ‘Brexit’ faded and as global investors eyed regional bond markets.
South Korea’s won advanced as offshore funds continued to buy the currency, while Malaysia’s ringgit was buoyed by higher commodity prices. —