Peso slides further before GDP report

The peso slid further against the dollar on Thursday on market expectations of weaker Philippine gross domestic product (GDP) growth last quarter.

The local unit closed at PHP 58.94 per dollar, weakening by 11 centavos from its PHP 58.83 finish on Wednesday, Bankers Association of the Philippines data showed.

This was its worst finish in over a week or since it closed at its all-time low of PHP 59.13 on Oct. 28.

The peso opened Thursday’s session stronger at PHP 58.72 against the greenback. Its intraday high was at PHP 58.65, while its weakest showing was at PHP 59.04 versus the dollar.

Dollars traded dropped to USD 1.31 billion from USD 1.44 billion.

The peso declined against the dollar on Thursday as the market expects softer third-quarter GDP growth due to a corruption scandal involving state flood control projects that could have affected infrastructure spending, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The dollar-peso closed higher on lower Philippine GDP expectations scheduled for tomorrow, coupled with upbeat US ADP employment data released overnight,” a trader said in a phone interview.

A BusinessWorld poll of 18 economists yielded a median forecast of 5.3% GDP growth for the third quarter. This would be slower than the 5.5% expansion in the second quarter, but a tad faster than the 5.2% expansion in the third quarter of 2024.

This would also fall below the government’s 5.5%-6.5% full-year growth target.

Mr. Ricafort added the peso was dragged by tempered expectations of a US Federal Reserve rate cut in December amid hawkish signals from several policy makers.

For Friday, both Mr. Ricafort and the trader see the peso moving between PHP 58.80 and PHP 59.10 per dollar. — Aaron Michael C. Sy