Peso may strengthen further as inflation likely eased in Jan.

THE PESO may strengthen against the dollar this week on expectations that headline inflation slowed further last month.

The local unit closed at PHP 55.92 per dollar on Friday, strengthening by 19.5 centavos from its PHP 56.115 finish on Thursday, Bankers Association of the Philippines data showed.

This was the peso’s best finish in more than two weeks or since it closed at PHP 55.84 per dollar on Jan. 18. This is also the first time since Jan. 19 that the local unit closed at the PHP 55-a-dollar level.

Week-on-week, the peso strengthened by 37 centavos from its PHP 56.29 finish on Jan. 26.

The peso opened Friday’s session at PHP 56.02 against the dollar, which was also its weakest showing. Its intraday best was at PHP 55.888 versus the greenback.

Dollars exchanged went down to USD 1.6 billion on Friday from USD 1.78 billion on Thursday.

The peso appreciated against the dollar on Friday amid downward momentum from the previous session and as investors awaited US jobs data released later that day, Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

The local unit was supported by lower global crude oil prices amid negotiations to pause the Israel-Hamas war to free civilian hostages, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.

For this week, Mr. Ricafort and Mr. Roces said the main driver for foreign exchange trading will be the release of January consumer price index (CPI) data on Tuesday.

A BusinessWorld poll of 16 analysts conducted last week yielded a median estimate of 3.1% for January CPI.

If realized, this would mark the second straight month that inflation was within the Bangko Sentral ng Pilipinas’ 2-4% target.

This would be below the 3.9% print in December and be the slowest since the 3% pace in February 2022.

Mr. Roces sees the peso moving between PHP 55.50 and PHP 56.20 per dollar this week, while Mr. Ricafort expects it to range from PHP 55.70 to PHP 56.20. — AMCS