THE PESO rebounded against the dollar on Thursday on slower-than-expected December inflation and following the release of the minutes of the US central bank’s meeting last month.
The local currency closed at PHP 55.75 versus the greenback, up by 16 centavos from Wednesday’s finish of PHP 55.91, data from the Bankers Association of the Philippines showed.
The peso opened Wednesday’s trading session at PHP 55.92 per dollar. Its weakest showing was at PHP 56.025, while its intraday best was its closing level of PHP 55.75.
Dollars traded went down to USD 1.061 billion from USD 1.273 billion on Wednesday.
“The dollar was marginally lower overnight after the release of the latest FOMC (Federal Open Market Committee) minutes, which we think resulted in a rather overblown market reaction. Minutes didn’t provide any surprises with majority of members agreeing to a slower pace of interest rate increases,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
“Onshore, Philippine CPI (consumer price index) data for December came out slightly lower than expected at 8.1% versus consensus estimate of 8.2%,” Mr. Asuncion said.
The dollar was roughly flat in choppy trading on Thursday after the release of the latest Fed minutes, Reuters reported.
The dollar index, which measures the currency against major peers, was last flat at 104.2 on Thursday.
Meanwhile, Philippine headline inflation picked up to 8.1% in December, a new 14-year high. It was also quicker than the 8% in November and 3.1% in December 2021.
Despite the slight pickup, this was closer to the lower end of the 7.8-8.6% estimate given by the Bangko Sentral ng Pilipinas (BSP) for the month.
Inflation averaged 5.8% in 2022, matching the BSP’s full-year forecast but exceeding its 2-4% target.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso was supported by gains at the stock market.
The bellwether Philippine Stock Exchange index climbed by 42.83 points or 0.63% to close at 6,761.33 on Thursday, while the broader all shares index rose by 13.38 points or 0.37% to 3,550.45.
For Friday, Mr. Ricafort gave a forecast range of PHP 55.65 to PHP 55.85 per dollar, while Mr. Asuncion sees the peso moving between PHP 55.50 and PHP 55.70. — AMCS with Reuters