Peso up after manufacturing, GIR data

The peso recovered against the dollar on Thursday on improved manufacturing data and as the Philippines’ gross international reserves (GIR) remained ample.

The local currency closed at PHP 56.79 versus the dollar on Thursday, strengthening by 15 centavos from Wednesday’s PHP 56.94 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Thursday’s session at PHP 56.85 per dollar. Its intraday best was at PHP 56.77, while its weakest showing was at PHP 56.97 against the greenback.

Dollars traded went up to USD 1.45 billion on Thursday from USD 1.36 billion recorded on Wednesday.

The peso strengthened against the dollar on Thursday on better manufacturing and “decent” GIR data, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Preliminary results of the Monthly Integrated Survey of Selected Industries (MISSI) showed factory output, as measured by the volume of production index (VoPI), rose by 5.7% year on year in July. This was higher than the revised 3.4% in June and 3.6% in July last year.

July’s VoPI growth was the fastest in two months or since 7.1% in May.

On a monthly basis, July’s VoPI expanded by 3.8% from June’s revised 2.9% contraction. Adjusting for seasonality factors, manufacturing output increased by 3%, a turnaround from 2.1% decline in June.

Year to date, factory output averaged 5.2% in the first seven months of the year.

Meanwhile, the Philippines’ GIR stood at USD 99.8 billion as of end-August, slipping by 0.2% from the USD 100 billion as of end-July.

Still, the dollar reserves went up by 2.4% from the USD 97.44 billion as of end-August 2022.

Mr. Ricafort added that the BSP could have entered the market to prevent the peso from closing at the USD 57-per-dollar level.

For Thursday, the peso may range from PHP 56.70 to PHP 56.90 per dollar, he said.

Meanwhile, the US dollar was loitering close to its highest point since March against major peers, and touched a fresh 10-month top versus the Japanese yen, the traditional global funding currency where interest rates remain ultra-low, Reuters reported.

The dollar index — which measures the currency against six developed-market peers, including the yen and euro — ticked up 0.07% to 104.93. It jumped to the highest since March 15 on Wednesday at 105.03.

The dollar earlier reached its strongest level since Nov. 4 versus the yen at 147.875.

The currency pair tends to move in step with long-term Treasury yields, which stood at 4.29% on Thursday after pushing to their highest since Aug. 23 at 4.306% in the previous session.

The euro, meanwhile, dropped by 0.1% to USD 1.0716, following its dip to a three-month trough of $1.0703 on Wednesday.

Elsewhere, the People’s Bank of China continued its bid to shore up the yuan by again setting strong official midpoints for the currency.

Despite those efforts, the yuan continues to hover on the weaker side of the closely watched 7.3 per dollar level in offshore trading, last changing hands at 7.3332. It sank to the lowest since early November at 7.3490 in the middle of last month, undercut by a rapidly deteriorating property sector and the risk of spillover into broader markets.

The Australian dollar, which often trades as a proxy for China, its top trading partner, eased 0.26% to $0.6366, keeping it close to this week’s 10-month low. — AMCS with Reuters