Peso weakens on US data

The peso dropped against the dollar on Wednesday due to faster-than-expected US consumer inflation.

The local unit closed at PHP 56.10 per dollar on Wednesday, weakening by 16 centavos from its PHP 55.94 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session at PHP 56.18 against the dollar. Its intraday best was at PHP 56.08, while its weakest showing was at PHP 56.333 versus the greenback.

Dollars exchanged rose to USD 1.34 billion on Wednesday from USD 1.26 billion on Tuesday.

“The peso weakened after US consumer inflation for January… surpassed market expectations,” a trader said in an e-mail.

The consumer price index (CPI) increased 0.3% last month after gaining 0.2% in December, the Labor department’s Bureau of Labor Statistics said, Reuters reported.

In the 12 months through January, the CPI increased 3.1% after advancing 3.4% in December. Economists polled by Reuters had forecast the CPI would gain 0.2% on the month and rise 2.9% on a year-on-year basis.

The dollar was generally stronger on Wednesday following the data, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Thursday, the trader said the peso could strengthen anew due to possibly hawkish comments from the Bangko Sentral ng Pilipinas after its policy meeting.

The trader sees the peso moving between PHP 55.95 and PHP 56.20 per dollar on Thursday, while Mr. Ricafort sees it ranging from PHP 56 to PHP 56.20. — A.M.C. Sy with Reuters