Peso strengthens against the dollar before third-quarter GDP report

The peso strengthened anew against the dollar on Wednesday on optimism over the economy’s performance in the third quarter.

The local unit closed at PHP 56.045 per dollar on Wednesday, rising by seven centavos from its PHP 56.115 finish on Tuesday, based on Bankers Association of the Philippines (BAP) data.

The peso opened Wednesday’s session at PHP 56.09 against the dollar. Its intraday best was at PHP 55.95, while its weakest showing was at PHP 56.10 versus the greenback.

Dollars exchanged went down to USD 1.24 billion on Wednesday from $1.62 billion on Tuesday, BAP data showed.

The peso strengthened against the dollar ahead of the release of third-quarter gross domestic product (GDP) data on Thursday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso appreciated on lingering optimism ahead of a potentially stronger third-quarter Philippine economic growth report tomorrow,” a trader likewise said in an e-mail on Wednesday.

A BusinessWorld poll of 18 economists and analysts last week yielded a median estimate of 4.9% for third-quarter GDP growth.

If realized, this would be faster than the 4.3% expansion recorded in the second quarter, but slower than 7.7% seen in the third quarter of 2022.

This would bring the average GDP growth for the first nine months to 5.2%, still below the government’s 6-7% full-year target.

The peso was also supported by lower global crude oil prices and US Treasury yields recently amid dovish signals from the US Federal Reserve, Mr. Ricafort said.

The US central bank kept its benchmark interest rate steady at the 5.25%-5.5% range for a second straight meeting during its Oct. 31 to Nov. 1 review.

The Fed has hiked rates by a cumulative 525 basis points since it began its tightening cycle in March 2022.

For Thursday, the trader said the peso could strengthen further as Fed Chair Jerome H. Powell is likewise expected to give a dovish speech on Friday.

The trader sees the peso move between PHP 55.90 and PHP 56.15 per dollar on Thursday, while Mr. Ricafort expects it to range from PHP 55.95 to PHp 56.15. — A.M.C. Sy