The peso dropped further against the dollar on Tuesday amid upbeat US manufacturing data and hawkish signals from US central bank officials.
The local currency closed at PHP 56.78 versus the dollar on Tuesday, weakening by a half centavo from Monday’s PHP 56.775 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Tuesday’s session weaker at PHP 56.825 per dollar. Its intraday best was at PHP 56.78, while its worst showing was at PHP 56.93 against the greenback.
Dollars traded went down to USD 932.2 million on Tuesday from the USD 1.15 billion on Monday.
“The peso weakened slightly as the upbeat US manufacturing PMI (purchasing managers’ index) report for September dampened views of a near-term recession,” a trader said in an e-mail.
US manufacturing took a step further towards recovery in September as production picked up and employment rebounded, according to a survey on Monday that also showed prices paid for inputs by factories falling considerably, Reuters reported.
The Institute for Supply Management said that its manufacturing PMI increased to 49 last month, the highest reading since November 2022, from 47.6 in August.
The peso weakened against the dollar on Tuesday due to hawkish signals from US Federal Reserve officials, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Fed officials said monetary policy will need to stay restrictive for “some time” to bring inflation back down to the central bank’s 2% target, Reuters reported.
Expectations of faster inflation in September also dragged down the peso, Mr. Ricafort added.
A BusinessWorld poll of 17 analysts yielded a median estimate of 5.4% for September inflation, near the low end of the Bangko Sentral ng Pilipinas’ 5.3-6.1% forecast for the month.
The Philippine Statistics Authority will release September inflation data on Thursday.
For Wednesday, the trader said the peso could strengthen ahead of likely weaker US private employment data.
The trader and Mr. Ricafort see the peso moving between PHP 56.70 and PHP 56.90 per dollar on Wednesday. — AMCS with Reuters