Peso strengthens further vs dollar

The peso hit a new four-month high against the dollar on Wednesday after inflation eased to a 20-month low in November and amid weakening global prospects as China’s credit rating outlook was downgraded.

The local unit closed at PHP 55.305 per dollar on Wednesday, strengthening by 1.5 centavos from its PHP 55.32 finish on Tuesday, based on Bankers Association of the Philippines data.

This was the peso’s strongest close since its PHP 55.19 per dollar finish on Aug. 2.

The peso opened Wednesday’s session stronger at PHP 55.30 against the dollar. Its intraday best was at PHP 55.295, while its weakest showing was at PHP 55.36 versus the greenback.

Dollars exchanged went down to $1.03 billion on Wednesday from USD 1.35 billion on Tuesday.

The peso continued to be supported by easing inflation, as well as lower global crude oil prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Headline inflation slowed to 4.1% in November from 4.9% in October and 8% in the same period last year. This was within the Bangko Sentral ng Pilipinas’ (BSP) 4-4.8% forecast and below the median estimate of 4.4% by 15 economists in a BusinessWorld poll conducted last week.

Year to date, inflation averaged 6.2%, faster than 5.6% in the same period last year.

The peso was also supported by weakening global sentiment after China’s credit outlook was downgraded by Moody’s Investors Service and softer US job openings data, a trader said in an e-mail.

The dollar was near a two-week high against a basket of currencies on Wednesday as investors assessed US economic data that showed a cooling labor market, while wagering the Federal Reserve will cut rates next year, Reuters reported.

The spotlight in Asia was on China, where the yuan extended losses as markets grappled with rating agency Moody’s cut to the Asian giant’s credit outlook.

The dollar index, which measures the US currency against six rivals, was 0.029% lower at 103.93, having climbed 0.3% overnight. The index is up 0.5% this month, after sliding 3% in November, its steepest monthly decline in a year.

Data on Tuesday showed US job openings fell to more than a 2-1/2-year low in October, the strongest sign yet that higher interest rates were dampening demand for workers. Data also showed there were 1.34 vacancies for every unemployed person in October, the lowest since August 2021.

For Thursday, the trader sees the peso moving between PHP 55.20 and PHP 55.45 per dollar, while Mr. Ricafort expects it to range from PHP 55.20 to PHP 55.45. — AMCS with Reuters