Peso sinks before US GDP report

The peso sank to a two-week low against the dollar on Wednesday on expectations of a strong US gross domestic product (GDP) report.

The local unit closed at PHP 56.25 per dollar on Wednesday, weakening by 17 centavos from its PHP 56.08 finish on Tuesday, Bankers Association of the Philippines data showed.

This was the peso’s weakest close in more than two weeks or since its PHP 55.29-per-dollar finish on Feb. 5.

The peso opened Wednesday’s session weaker at PHP 56.14 against the dollar. Its worst showing was at PHP 56.28, while its intraday best was at PHP 56.12 versus the greenback.

Dollars exchanged went down to USD 1.12 billion on Wednesday from USD 1.74 billion on Tuesday.

“The peso weakened amid a potentially robust fourth-quarter US GDP growth report,” a trader said in an e-mail.

The second estimate for fourth-quarter and full-year 2023 US GDP will be released overnight.

US GDP increased at an annual rate of 3.3% in the fourth quarter of 2023, according to the advance estimate released last month, slower than the 4.9% seen the prior quarter.

For the full year, GDP growth picked up to 2.5% in 2023 from 1.9% in 2022.

The peso weakened against a generally stronger dollar after US Federal Reserve Governor Michelle Bowman said it was too soon to cut interest rates despite easing inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Thursday, the trader said the peso could weaken further before the release of the latest US personal consumption expenditures price index.

The trader sees the peso moving between PHP 56.10 and PHP 56.35 per dollar on Thursday, while Mr. Ricafort expects it to range from PHP 56.15 to PHP 56.35. — AMCS