THE PESO moved sideways against the dollar on Tuesday due to profit taking and as data showed inflation eased last month.
The local currency finished at P50.63 against the greenback yesterday, 3.5 centavos stronger than its P50.665 close on Monday.
The peso traded sideways the whole day, opening the session at P50.61 versus the dollar, while its intraday high was seen at P50.525. Its worst showing for the day was its closing rate.
Dollars traded slid to $668.1 million yesterday from $723.4 million in the previous session.
Traders attributed the slight uptick of the peso to profit taking from Monday’s dollar rally.
“Actually today, [we only saw] sideways trading probably because of profit taking from yesterday’s rally,” the trader said on Tuesday.
The dollar strengthened on Monday on the back of the passage of the tax reform bill in the US. This prompted the Asian currencies as well as the peso to slide.
For Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, the dollar “was steady as market insights see a tax cut may lead to more pronounced downtrend for the greenback.”
“Apart from the profit taking, we also saw some rebound on stocks so there was selling pressure,” the first trader added.
The Philippine Stock Exchange index closed at 8,145.00, up by 60.55 or 0.74% against its previous closing.
While Mr. Asuncion said the subdued November inflation was taken into consideration by market players, another trader noted the released figure did not make much impact on trading given that the 3.3% figure was well within their expectations.
“Inflation data is [already] expected. The median forecast was at 3.2%, so it didn’t make much impact on the peso-dollar trading,” another trader said.
Headline inflation eased last month, data from the Philippine Statistics Authority showed, due to decreases in prices of food and beverages.
Inflation slowed to 3.3% in November from the 3.5% print logged the previous month, albeit faster than the 2.5% rate recorded in the same month last year. This fell within the Bangko Sentral ng Pilipinas’ (BSP) estimate of 2.9-3.6%.
Last month’s inflation rate brought the year-to-date average to 3.2%, within the government’s 2-4% target band and matching the BSP’s full-year forecast.
For today, traders are expecting the peso to play within the P50.50 to P50.80 range, while Mr. Asuncion gave a wider range of P50.40 to P50.90. — K.A.N. Vidal