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Peso declines on bargain-hunting

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THE PESO dropped against the dollar on Friday due to bargain-hunting in the afternoon session and despite softer US producer prices data as well as hawkish European Central Bank (ECB) minutes.

The local currency finished at P50.40 against the greenback at the week’s close, moving sideways as it lost four centavos from its P50.36-per-dollar close on Thursday.

The local unit opened stronger at P50.27 versus the dollar. Its best showing stood at P50.25, while its intraday low was Friday’s closing rate.

Dollars traded on Friday surged to $588.5 million from the $833.7 million that changed hands the previous session.

A trader attributed the sideways movement of the local currency to the “last-minute bargain-hunting” in the afternoon session.

“Market players continue to buy on dips, and might be some demands from corporates since it’s mid-month,” the trader noted.

This buying, however, was tempered as US producer prices for the month of December slipped for the first time in nearly one-and-a-half years.

Reuters reported that producer price index (PPI) for final demand slipped 0.1% last month, down from November’s 0.4%. This was the first drop of the PPI since August 2016.

The softer December PPI is seen to offset the expectations of accelerating inflation this year.

“[The PPI data] is likely indicative of a softer US headline inflation reading to be released tonight,” the trader noted.

The trader added that the “hawkish” minutes from the ECB also pulled down the dollar.

Minutes of the December meeting of ECB’s policymakers hinted that they are preparing to wind down their monetary stimulus program soon. — K.A.N. Vidal