The peso declined further against the dollar on Thursday as the US consumer price index (CPI) continued to pick up in August.
The local currency closed at PHP 56.765 versus the dollar on Thursday, weakened by 4.50 centavos from Wednesday’s PHP 56.72 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Thursday’s session stronger at PHP 56.665 per dollar. Its intraday best was at PHp 56.65, while its weakest showing was at PHP 56.78 against the greenback.
Dollars traded went up to USD 1.17 billion on Thursday from USD 1.02 billion on Wednesday.
The peso was dragged down by faster-than-expected August US consumer inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso weakened after US core inflation came in hotter than market expectations,” a trader likewise said.
US consumer prices increased by the most in 14 months in August as the cost of gasoline surged, but the annual rise in underlying inflation was the smallest in nearly two years, likely giving the US Federal Reserve cover to leave interest rates unchanged next Wednesday, Reuters reported.
The mixed report from the Labor Department on Wednesday was published a week before the Fed’s policy meeting and followed data this month showing an easing in labor market conditions in August. Economists, however, believe officials at the US central bank will continue to signal an additional rate hike this year given the stickiness in services inflation.
The US CPI went up by 0.6% in August after rising by 0.2% in the last two months.
In the 12 months through August, consumer prices picked up by 3.7% after rising by 3.2% in July.
For Friday, the trader said the peso could rebound ahead of a potentially softer US retail sales report.
The trader sees the peso ranging from PHP 56.60 and PHP 56.85 a dollar on Friday, while Mr. Ricafort expects it to move from PHp 56.65 to PHP 56.85. — AMCS with Reuters