Currencies 2 MIN READ

Peso rebounds to PHP 55:UD 1 level

April 24, 2023By BusinessWorld

THE PESO rebounded against the dollar on Monday, returning to the PHP 55 level, following softer US economic data that spurred recession fears and bets that the US Federal Reserve would pause its rate hike cycle.

The local currency closed at PHP 55.77 versus the dollar on Monday, appreciating by 25 centavos from Thursday’s PHP 56.02 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Monday’s session at PHP 55.95 per dollar. Its intraday best was at PHP 55.75, while its worst showing was at PHP 56.01 versus the greenback.

Dollars traded went up to USD 1.21 billion on Monday from the USD 1.08 billion recorded on Thursday.

The peso rose as weak US economic data fanned fears of a recession, which could reduce the need for further Fed rate hikes, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 245,000 for the week ended April 15, the US Labor department reported on Friday.

Meanwhile, existing home sales dropped 2.4% to a seasonally adjusted annual rate of 4.44 million units last month, the National Association of Realtors said on Thursday. They had increased in February for the first time in a year.

The Fed has hiked borrowing costs by a total of 475 basis points (bps) since March 2022, with its target interest rate now at a range between 4.75% and 5%.

Its next meeting is on May 2-3.

“[The] peso was the outperformer in Asia today, possibly due to pent-up inflows over the weekend and profit-taking after the furious upward run in the past week,” a trader said in a Viber message on Monday.

The peso depreciated by 81 centavos week on week to close at PHP 56.02 per dollar on April 20 from PHP 55.21 finish on April 14.

The peso was also supported by the drop in global crude oil prices, Mr. Ricafort added.

Brent crude slipped 91 cents or 1.11% to USD 80.75 a barrel by 0627 GMT, while US West Texas Intermediate crude was at USD 76.96 a barrel, also down 91 cents or 1.17%, Reuters reported.

For Tuesday, the trader sees the peso moving between PHP 55.50 and PHP 56 per dollar, while Mr. Ricafort gave a forecast of PHP 55.65 to PHP 55.85. — By AMCS with Reuters

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