Peso may stay at PHP56-per-dollar level as market awaits inflation report

The peso could trade sideways against the dollar this week ahead of the release of March inflation data.

Last week, the local unit strengthened by three centavos against the dollar to close at PHP 56.24 on Wednesday from its PHP 56.27 finish on March 22.

For this week, Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message that the peso could remain at the PHP 56-per-dollar level ahead of the release of March inflation data.

A BusinessWorld poll of 17 analysts yielded a median estimate of 3.8% for March headline inflation. If realized, this would be faster than the 3.4% print in February, but slower than 7.6% in the same month a year ago.

This would also mark the second straight month that inflation picked up on a monthly basis. Still, the consumer price index (CPI) would be within the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target for a fourth straight month.

The Philippine Statistics Authority will release March inflation data on April 5, Friday.

The February US personal consumption expenditures (PCE) price index data could also affect peso-dollar trading this week, Mr. Roces said.

The PCE price index rose 0.3% last month, the US Commerce department’s Bureau of Economic Analysis said, Reuters reported. Data for January was revised higher to show the PCE price index climbing 0.4% instead of 0.3% as previously reported. Economists polled by Reuters had forecast the PCE price index gaining 0.4% on the month.

In the 12 months through February, PCE inflation advanced 2.5% after increasing 2.4% in January.

The market will also monitor signals from officials ahead of the BSP’s policy meeting on April 8, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The BSP in February kept its benchmark rate steady at a near 17-year high of 6.5% for a third straight meeting after it raised borrowing costs by 450 basis points from May 2022 to October 2023 to bring down elevated inflation.

Mr. Roces expects the peso to move between PHP 56 and PHP 56.50 per dollar this week, while Mr. Ricafort sees it ranging from PHP 55.90 to PHP 56.50. — A.M.C. Sy with Reuters