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THE PESO could weaken in opposition to the greenback this week because the market expects a giant charge hike from the Bangko Sentral ng Pilipinas (BSP) after headline inflation surged in January.
The native unit closed at P54.42 per greenback on Friday, strengthening by three centavos from its P54.45 end on Thursday, knowledge from the Bankers Affiliation of the Philippines’ web site confirmed.
Week on week, nonetheless, the peso dropped by 74 centavos from its P53.68 end on Feb. 3.
The peso opened Friday’s session at P54.65 per greenback. Its weakest exhibiting was at P54.70, whereas its intraday finest was at P54.40 in opposition to the dollar.
{Dollars} exchanged went right down to $1.248 billion on Friday from $1.375 billion on Thursday.
The peso strengthened on Friday “after a gauge of the US greenback versus main international currencies once more corrected barely decrease from close to one-month highs not too long ago,” Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort stated in a Viber message.
The greenback index was up 0.4% at 103.55 on Friday as traders await the US client value index (CPI) report back to be launched on Feb. 14.
For this week, Mr. Ricafort stated peso-dollar buying and selling might be pushed by sentiment forward of the BSP’s coverage assembly on Feb. 16, Thursday.
He stated he expects a 25-basis-point (bp) enhance in borrowing prices on the assembly to match the US Federal Reserve’s transfer.
In the meantime, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion stated in a report that the “disappointing” January inflation report has fueled bets that the BSP will hike charges by as a lot as 50 bps on Thursday.
“A BSP extra hawkish than the (US Federal Reserve) of their first coverage conferences this yr, may spill over right into a firmer peso later within the week,” he stated.
“The peso can even profit from flows attracted by the newest retail Treasury bond (RTB) issuance whose settlement begins on Feb. 22,” Mr. Asuncion added.
Headline inflation accelerated to a brand new 14-year excessive of 8.7% in January as meals costs continued to surge, inflicting renewed charge hike worries.
This was sooner than the 8.1% print in December 2022 and three% in the identical month final yr. It additionally marked the tenth consecutive month that inflation was above the BSP’s 2-4% goal for the yr.
The BSP’s policy-setting Financial Board final yr raised rates of interest by 350 bps, bringing its key charge to a 14-year excessive of 5.5%.
In the meantime, the federal government final week raised an preliminary P162.18 billion from the rate-setting public sale for its supply of 5.5-year RTBs.
Tenders hit P196.109 billion, or greater than six occasions the P30 billion on the public sale block. The RTBs had been awarded at a coupon charge of 6.125%.
Mr. Ricafort expects the peso to commerce between P54.20 and P54.70 per greenback this week, whereas Mr. Asuncion sees the native unit transferring from P54.10 to P55. — A.M.C. Sy
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