Peso rebounds after PHL GDP report

THE PESO rebounded against the dollar on Wednesday following data showing better-than-expected Philippine gross domestic product (GDP) growth last year.

The local unit closed at PHP 56.275 per dollar on Wednesday, strengthening by 12.6 centavos from its PHP 56.401 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session lower at PHP 56.45 against the dollar. Its intraday best was at PHP 56.27, while its weakest showing was at PHP 56.50 versus the greenback.

Dollars exchanged went down to USD 1.18 billion on Wednesday from USD 1.32 billion on Tuesday.

The peso strengthened on Wednesday amid stronger-than-expected GDP growth in 2023, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso appreciated as the Philippine growth for the fourth quarter mostly came in line within market expectations,” a trader added in an e-mail.

The Philippine economy grew by 5.6% in 2023, slightly faster than the 5.5% median estimate of 20 economists in a BusinessWorld poll.

Still, this fell short of the government’s 6-7% target for the year and was slower than the 7.6% expansion in 2022.

In the fourth quarter alone, GDP also grew by 5.6%, slightly below the 5.7% median forecast in the same BusinessWorld poll.

This was slower than the revised 6% in the third quarter and the 7.1% growth in the same period in 2022.

The peso was also supported by the Bangko Sentral ng Pilipinas’ (BSP) inflation forecast for January, Mr. Ricafort added.

The BSP expects headline inflation to have settled within the 2.8-3.6% range last month.

If realized, this would be slower than 3.9% in December and 8.7% seen in January 2023, and would mark the second straight month that inflation was within the BSP’s 2-4% target.

The Philippine Statistics Authority will release January inflation data on Feb. 6.

For Thursday, the trader said trading will be driven by the result of the US Federal Reserve’s policy meeting.

The trader sees the peso moving between PHP 56.15 and PHP 56.35 per dollar on Thursday, while Mr. Ricafort sees the peso ranging from PHP 56.20 to PHP 56.40. — A.M.C. Sy