Currencies 2 MIN READ

Peso slips on weaker Q2 economic growth

August 11, 2023By BusinessWorld

The peso slipped against the dollar on Thursday following the release of data showing that the Philippine economy grew slower than expected in the second quarter.

The local currency closed at PHP 56.22 versus the dollar on Thursday, weakening by two centavos from Wednesday’s PHP 56.20 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Thursday’s session weaker at PHP 56.25 per dollar. Its intraday best was at PHP 56.13, while its worst showing was at PHP 56.45 against the greenback.

Dollars traded rose to USD 1.24 billion on Thursday from USD 996.2 million on Wednesday.

The peso was dragged down by data showing slower gross domestic product (GDP) growth last quarter, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso depreciated following the weaker-than-expected Philippine GDP report for the second quarter,” a trader likewise said in an e-mail.

The Philippine economy expanded by 4.3% in the second quarter, the slowest in two years, Philippine Statistics Authority data released on Thursday showed.

The second-quarter print was slower than the revised 6.4% growth in the first quarter and 7.5% in the same period a year earlier. It was also well below the 6% median forecast in a BusinessWorld poll of 21 economists conducted last week.

For the first half, GDP growth averaged 5.3%, lower than the government’s 6-7% target.

Mr. Ricafort added that global crude oil prices hitting new highs recently also contributed to the weaker peso.

On Thursday, Brent crude edged up by 14 cents to USD 87.69 a barrel by 0757 GMT while West Texas Intermediate crude (WTI) crept up by 1 cent to USD 84.5, Reuters reported.

Oil prices hit new peaks on Wednesday with the global Brent benchmark touching its highest since January after a steep drawdown in US fuel stockpiles and Saudi and Russian output cuts offset concerns about slow demand from China.

Brent crude settled USD 1.38 or 1.6% higher at USD 87.55 a barrel, its highest since Jan. 27.

WTI closed USD 1.48 or 1.8% higher at USD 84.40, its highest since November 2022

For Friday, the trader said the market could react to the US consumer price inflation report set to be released overnight.

The trader expects the peso to move between PHP 56.15 and PHP 56.35 per dollar on Friday, while Mr. Ricafort sees it ranging from PHP 56.10 to PHP 56.30. — A.M.C. Sy with Reuters

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