The peso inched down against the dollar on Tuesday due to recession fears following weak China gross domestic product (GDP) growth data.
The local currency closed at PHP 54.41 versus the dollar on Tuesday, weakening by three centavos from Monday’s PHP 54.38 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Tuesday’s session at PHP 54.41 per dollar. Its weakest showing of the day was at P54.465, while its intraday best was at PhP 54.36 against the greenback.
Dollars traded fell to USD 753.4 million on Tuesday from the USD 977.4 million seen on Monday.
The peso fell due to negative sentiment following weak economic growth in China in the second quarter, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso depreciated from renewed recession concerns after China posted a weaker economic growth for the second quarter of 2023,” a trader likewise said in an e-mail.
China’s economy grew at a frail pace in the second quarter as demand weakened at home and abroad, with the post-coronavirus 2019 momentum faltering rapidly and raising pressure on policy makers to deliver more stimulus to shore up activity, Reuters reported.
Gross domestic product (GDP) grew just 0.8% in April to June from the previous quarter, on a seasonally adjusted basis, data released by the National Bureau of Statistics showed on Monday, versus analysts’ expectations in a Reuters poll for a 0.5% increase and compared with a 2.2% expansion in the first quarter.
On a year-on-year basis, GDP expanded 6.3% in the second quarter, accelerating from 4.5% in the first three months of the year, but the rate was well below the forecast for growth of 7.3%.
China’s top economic planner pledged on Tuesday that it would roll out policies to “restore and expand” consumption without delay as consumers’ purchasing power remained weak.
Mr. Ricafort added that the peso also declined after Russia terminated the Black Sea grain deal.
Russia halted participation on Monday in the year-old United Nations-brokered deal that lets Ukraine export grain through the Black Sea, causing concern in poorer countries that price rises will put food out of reach.
For Wednesday, the trader said the peso could strengthen ahead of a likely weak US retail sales report.
Both the trader and Mr. Ricafort see the peso moving between PHP 54.30 and PHP 54.50 per dollar on Wednesday.
Meanwhile, the dollar drifted near a 15-month low against its major peers on Tuesday, as investors awaited fresh catalysts to gauge for downside in the wake of last week’s cooler-than-expected US inflation.
The US dollar index, which measures the greenback against a basket of six currencies, fell as low as 99.587, languishing near Friday’s trough of 99.574, its lowest since April 2022.
The index had clocked its worst week of 2023 last week, after data showed US inflation subsided further with consumer prices registering their smallest annual increase in more than two years. That took pressure off the Federal Reserve to continue raising interest rates.
Money markets have almost fully priced a 25-basis-point rate hike from the Fed at its policy meeting later this month, but see rates coming down as early as December. — AMCS with Reuters
This article originally appeared on bworldonline.com