Peso inches up before US economic data

The peso inched up versus the dollar on Wednesday on expectations of a weak US durable goods report overnight.

The local currency closed at PHP 56.95 versus the dollar on Wednesday, rising by half a centavo from Tuesday’s PHP 56.955 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Wednesday’s session stronger at PHP 56.90 per dollar. Its intraday best was at PHP 56.87, while its weakest showing was at PHP 56.98 against the greenback.

Dollars traded rose to USD 1.35 billion on Wednesday from the USD 1.06 billion on Tuesday.

“The peso appreciated slightly ahead of a potentially downbeat US durable goods report,” a trader said in an e-mail.

The US Census Bureau was scheduled to release the data overnight.

The peso inched up on Wednesday after President Ferdinand R. Marcos, Jr. rejected a proposal to temporarily reduce tariffs on imported rice and the ceiling on rice prices, which could have helped stabilize inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.

Mr. Marcos turned down his economic managers’ proposal as he said that projections show that world rice prices would go down.

The National Economic and Development Authority (NEDA) had proposed to cut the tariff rates to as low as 0% from 35%.

During the Tuesday meeting, NEDA Secretary Arsenio M. Balisacan and Agriculture undersecretaries Leocadio Sebastian and Mercedita Sombilla “agreed that it was not the right time to lower tariff rates because of the downtrend in rice prices in the world market,” the presidential palace said.

At the meeting, the President said the executive order that set a price cap of PHP 45 a kilo for well-milled rice and PHP 41 for regular milled rice would remain in effect.

Headline inflation rose to 5.3% in August from 4.7% in July.

Year to date, inflation averaged 6.6%, still well above the central bank’s 2-4% target for the year.

For Thursday, the trader sees the peso moving between PHP 56.80 and PHP 57 per dollar, while Mr. Ricafort sees it ranging from PHP 56.78 to PHP 56.98.

Meanwhile, the dollar scaled a 10-month high against its major peers on Wednesday, pushing the euro and sterling to 6-month lows and keeping the yen deep in intervention territory, as the prospect of higher-for-longer US rates gripped markets, Reuters reported.

The euro was last 0.1% lower at USD 1.0567, after hitting a six-month low of USD 1.0555 earlier in the session. The single currency is on track to lose more than 3% for the quarter, its worst quarterly performance in a year.

Sterling was also down 0.1% at USD 1.2149 after hitting a six-month trough of USD 1.2135 earlier on Wednesday, and was headed for a quarterly loss of more than 4%.

The US dollar index, meanwhile, peaked at a 10-month high of 106.32.

Fed officials have in recent days flagged the possibility that the central bank would need to raise interest rates further, after it kept rates steady last week but stiffened its hawkish monetary policy stance. — AMCS with Reuters