Peso inches higher as markets eye US inflation data

The peso went up against the dollar on Monday as traders stayed cautious before the release of key US inflation data this week.

The currency inched up by 4.1 centavos to end at PHP 62.76 versus the greenback from its PHP 62.801 finish on Friday, Bankers Association of the Philippines data showed.

The local unit opened Monday’s session stronger at PHP 62.65 per dollar, which was also its intraday high. Its weakest showing was PHP 62.80.

Dollars traded went down to USD 1.056 billion from USD 1.393 billion.

The peso traded within a narrow range ahead of the release of US consumer and producer inflation data later this week as these could affect the Federal Reserve’s policy decision this month, the first trader said by phone

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added that there were signs of possible intervention in the market to smoothen volatility.

“The peso appreciated on growing expectations that the BSP (Bangko Sentral ng Pilipinas) might deliver a policy rate hike next week,” a second trader said in an e-mail.

The BSP’s Monetary Board will meet to review its policy stance on Oct. 22. The market widely expects a fourth straight hike after September inflation sharply picked up to an over three-year high of 7.2% from 6.1% in August and 1.7% a year ago. This marked the seventh straight month that inflation remained above the central bank’s 3% target.

For Tuesday, the first trader sees the peso ranging from PHP 62.60 to PHP 62.90 against the dollar, while both Mr. Ricafort and the second trader expect the currency to move between PHP 62.60 and PHP 62.85. — Aaron Michael C. Sy