Peso inches sideways ahead of inflation data
THE PESO inched sideways against the dollar on Wednesday ahead of the release of September inflation data and following a weak manufacturing report out of the United States.
The local unit ended at P51.94 against the greenback on Wednesday, inching down by a centavo from its P51.93-per-dollar close on Tuesday.
The peso started the session at P51.92 per dollar. It dropped to as low as P52.935, while its intraday best was at P51.87 against the greenback.
Dollars traded thinned to $969.1 million yesterday from $1.173 billion on Tuesday.
“The market moved sideways as investors await inflation print for September. It is, however, expected that inflation has further declined due to base effects and continuing decline of annual percentage increases in food prices,” UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said in a mobile phone message.
“The slightly weaker peso today may have to do with the negative market sentiment brought about by weak US manufacturing/ factory data...that caused some risk aversion in the global financial markets/emerging markets, thereby partly weighing on the peso,” Rizal Commercial Banking Corp. (RCBC) chief economist Michael L. Ricafort said in a text message on Wednesday.
The Philippine Statistics Authority will release official September inflation data on Friday. The Bangko Sentral ng Pilipinas’ Department of Economic Research said inflation likely slowed to a range of 0.6-1.4% last month on the back of lower rice prices and electricity rates. Headline inflation stood at 1.7% in August.
Meanwhile, US manufacturing activity tumbled to a more than 10-year low in September as lingering trade tensions weighed on exports, further heightening financial market fears of a sharp slowdown in economic growth in the third quarter.
The Institute for Supply Management said its index of national factory activity dropped 1.3 points to a reading of 47.8 last month, the lowest level since June 2009, when the Great Recession was ending. A reading below 50 indicates contraction in the manufacturing sector, which accounts for about 11% of the US economy.
For today, UnionBank’s Mr. Asuncion sees the peso trading within P51.60-51.90 versus the dollar, while RCBC’s Mr. Ricafort expects the local unit to move around the P51.80-52.10 level.