Currencies 2 MIN READ

Peso weakens further due to US, China data

July 20, 2023By BusinessWorld

The peso weakened further against the dollar on Wednesday following slower-than-expected US retail sales data and amid persistent worries over the weak China gross domestic (GDP) growth in the second quarter.

The local currency closed at PHP 54.515 versus the dollar on Wednesday, declining by 10.50 centavos from Tuesday’s PHP 54.41 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Wednesday’s session at PHP 54.45 per dollar, which was also its intraday best. Its weakest showing for the day was at PHP 54.65 against the greenback.

Dollars traded jumped to USD 1.05 billion on Wednesday from the USD 753.4 million seen on Tuesday.

The peso dropped following data on US retail sales and economic growth in China, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso weakened amid lingering recession worries from downbeat US retail sales and weaker Chinese GDP reports this week,” a trader likewise said in an e-mail.

US retail sales increased 0.2% last month. Data for May was revised higher to show sales gaining 0.5% instead of 0.3% as previously reported, Reuters reported.

Meanwhile, China 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%.

The peso declined following the recovery of the US dollar, Mr. Ricafort added.

The dollar index was last up 0.04% on the day at 99.924 after earlier falling to 99.549, the lowest since April 2022.

For Thursday, the trader said the peso could continue to weaken following the release of June inflation data from Europe.

The trader sees the peso moving between PHP 54.35 and PHP 54.60 per dollar on Thursday, while Mr. Ricafort sees it ranging from PHP 54.40 to PHP 54.60. — AMCS with Reuters

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