Peso weakens on China GDP data

THE PESO declined against the dollar on Tuesday as economic growth in China was stronger than expected in the fourth quarter, boosting the greenback and global oil prices.

The local currency closed at PHP 54.82 versus the greenback on Tuesday, declining by 24.50 centavos from Monday’s PHP 54.575 finish, data from the Bankers Association of the Philippines showed.

The peso opened Tuesday’s trading session slightly weaker at PHP 54.60 per dollar. Its worst showing was at PHP 54.93, while its intraday best was at P54.55 against the greenback.

Dollars traded rose to USD 1.373 billion on Tuesday from USD 1.27 billion on Monday.

“The peso weakened amid increased global activity prospects following the stronger-than-expected fourth-quarter Chinese GDP (gross domestic product) growth report,” a trader said in an e-mail.

The dollar index bounced from a seven-month low of 101.77 made a day ago, holding at 102.30, Reuters reported.

China’s economic growth in 2022 slumped to one of its worst levels in nearly half a century as the fourth quarter was hit hard by strict coronavirus disease 2019 (COVID-19) curbs and a property market slump, raising pressure on policy makers to unveil more stimulus this year.

China GDP grew 2.9% in October-December from a year earlier, data from the National Bureau of Statistics showed on Tuesday, slower than the third-quarter’s 3.9% pace.

The rate still exceeded the second quarter’s 0.4% expansion and market expectations of a 1.8% gain.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso weakened as oil prices remained elevated.

US crude fell 0.69% to USD 79.32 a barrel, paring some morning losses, while Brent rebounded to gain 0.25% at USD 84.67 a barrel, still near their highest levels this month as easing COVID-19 restrictions in China raised hopes of a demand recovery in the world’s top crude importer.

For Wednesday, the trader said the peso may rebound against the dollar on expectations of a weak US producer inflation report.

The trader sees the peso moving between PHP 54.70 and PHP 54.95 per dollar on Wednesday, while Mr. Ricafort gave a slightly narrower forecast range of PHP 54.75 to PHP 54.95. — AMCS with Reuters