Currencies 2 MIN READ

Peso strengthens after US CPI release

December 14, 2022By Business World

THE PESO strengthened against the dollar on Wednesday after the recent release of positive US consumer inflation data.

The local currency ended at PHP 55.745 against the greenback, inching up by 15.50 centavos from Tuesday’s PHP 55.90 close, data from the Bankers Association of the Philippines’ website showed.

The peso opened the day’s session at PHP 55.65 per dollar. Its weakest showing for the day was at PHP 55.82, while its intraday best was at PHP 55.60 versus the greenback.

Dollars traded jumped to USD 731.72 million on Wednesday from USD 1.12 billion on Tuesday.

A trader said in a Viber message that the dollar weakened due to the release of the US consumer price index (CPI) for November.

US consumer prices rose 0.1% last month, which was the lowest rate in 15 months after advancing 0.4% in October, according to data from the Labor department.

Year to date, the CPI climbed 7.1%, the smallest advance since December 2021.

The annual CPI last peaked at 9.1% in June, which was the biggest increase since November 1981.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that this could affect the aggressiveness of future Fed rate hikes.

The Fed is expected to raise rates by just 50 basis points (bps) this week following four straight 75-bp increases.

Meanwhile, the BSP is set to hold its policy meeting on Thursday, where it is also expected to hike rates by 50 bps, following the Fed’s decision.

Mr. Ricafort expects the local unit to move from P55.65 to P55.85 per dollar on Thursday, while the trader gave a wider forecast range of PHP 55.20 to PHP 56, as the market reacts to the Fed’s meeting results. — Aaron Michael C. Sy

 

This article originally appeared on bworldonline.com

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