Peso drops on US data

Business World - - Banking & Finance - An­gelo N. Vi­dal Karl

THE PESO de­clined against the dol­lar on Mon­day as in­vestors pock­eted prof­its fol­low­ing the US in­fla­tion data that came out be­fore the week­end.

The lo­cal cur­rency ended yes­ter­day’s ses­sion at P52.26 ver­sus the green­back, 12 cen­tavos weaker than the P52.14-per-dol­lar fin­ish last Fri­day, which was an eight-month high.

The peso opened the ses­sion weaker at P52.17 against the dol­lar, slid­ing to as low as P52.275 in­tra­day. On the other hand, its best show­ing for the day stood at P52.11 ver­sus the US cur­rency.

Trad­ing vol­ume thinned to $693.89 mil­lion from the $831 mil­lion that switched hands the pre­vi­ous ses­sion.

A for­eign ex­change trader said the peso weak­ened yes­ter­day in line with other cur­ren­cies as the dol­lar re­cov­ered from the pre­vi­ous low.

“This move is just short-dol­lar profit tak­ing... There’s noth­ing sig­nif­i­cant abroad,” the trader said in a phone in­ter­view. “We only had a data last Fri­day, the US CPI (con­sumer price in­dex), which came in line with ex­pec­ta­tions.”

The US La­bor Depart­ment re­ported that con­sumer prices de­clined 0.1% in De­cem­ber, its first drop in nine months, on the back of steep de­cline in gaso­line prices amid pres­sures from steady in­creases in rental hous­ing and health­care costs.

“We don’t re­ally have any near-term cat­a­lyst in the mo­ment. The mar­ket will tend to just lock in profit and re-es­tab­lish once there’s a new data com­ing,” the trader men­tioned.

An­other trader said in an email that the peso weak­ened as “in­vestors took ad­van­tage of the fresh eight-month high of the lo­cal cur­rency to pile up to­wards the green­back.”

In the com­ing days, the first trader added that the mo­men­tum for the peso to strengthen is “still in­tact.”

ING Bank N.V.-Manila said in a re­port on Mon­day that the peso should “con­tinue to en­joy an ap­pre­ci­a­tion bias” as long as the US Fed­eral Re­serve re­mains dovish and in­vestors chase yields.

Fed Chair Jerome H. Pow­ell said on Thurs­day that the mone­tary author­ity can af­ford to “be pa­tient” on its path to­wards higher in­ter­est rates, adding that pol­icy mak­ers are not look­ing at a “pre­set path” for key rates for this year.

“[How­ever], we ex­pect PHP to still slightly trail the re­gional gain­ers on cor­po­rate de­mand,” ING added.

For to­day, the first trader ex­pects the peso to trade be­tween P52.10 and P52.30, while the other gave a P52.15-P52.35 range.

“The peso might ap­pre­ci­ate fol­low­ing the dovish hints from both Fed Chair Pow­ell and Fed Vice-Chair Clar­ida, along­side with ex­pec­ta­tions of weaker US pro­ducer prices in­fla­tion,” the sec­ond trader noted.

BW FILE PHOTO

THE PESO went down on profit tak­ing and fol­low­ing US in­fla­tion data.

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