Currencies 2 MIN READ

Peso sinks to PHP56:USD1 level ahead of GDP data

August 8, 2023By BusinessWorld

The peso dropped to the PHP 56-per-dollar level for the first time in almost two months on Monday on expectations of slower gross domestic product (GDP) growth in the second quarter.

The local currency closed at PHP 56.02 versus the dollar on Monday, weakening by 28 centavos from Friday’s PHP 55.74 finish, data from the Bankers Association of the Philippines’ website showed.

This was the peso’s weakest close since it finished at PHP 56.05 per dollar on June 9.

The local unit opened Monday’s session at PHP 55.65 per dollar. Its intraday best was at PHP 55.60, while its weakest showing for the day was at PHP 56.06 against the greenback.

Dollars traded dropped to USD 973.75 million on Monday from the USD 1.14 billion seen on Friday.

“The peso weakened… amid market expectations of a slightly weaker Philippine economic growth in the second quarter,” a trader said in an e-mail.

A BusinessWorld poll of 21 economists conducted last week yielded a median estimate of 6% for second-quarter GDP growth.

If realized, this would be slower than the 6.4% growth in the first quarter and the 7.5% expansion in the same period in 2022.

This would bring the first-half average to 6.2%, within the government’s 6-7% full-year target.

The Philippine Statistics Authority (PSA) will release second-quarter GDP data on Thursday, Aug. 10.

The peso also declined due to a stronger dollar recently and elevated global crude oil prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar index was 0.08% higher at 102.14, edging away from Friday’s low of 101.73, Reuters reported.

Meanwhile, oil prices hovered near their highest levels since mid-April after top producers Saudi Arabia and Russia pledged to extend supply cuts through September, further tightening supplies.

Prices have seen a sustained rally, with both key benchmarks notching up their sixth consecutive weekly gains last week.

On Monday, Brent crude futures slipped 24 cents to $86 a barrel by 0820 GMT, while US West Texas Intermediate crude was at $82.55 a barrel, down 27 cents.

For Tuesday, the trader said the peso could recover on expectations of better trade data.

The trader expects the peso to move from PHP 55.85 to PHP 56.10 per dollar on Tuesday, while Mr. Ricafort expects it to trade from PHP 55.90 to PHP 56.10. — AMCS with Reuters

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