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Peso ends flat after inflation data

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THE PESO moved sideways against the dollar on Friday following the faster inflation print in April.

The local currency ended at P51.675 versus the greenback on Friday, mostly flat from the P51.67-per-dollar finish on Thursday.

The peso opened the session flat at P51.67 against the US currency, while it soared to as high as P51.555. Meanwhile, it slipped to a P51.71 low before landing at its close.

Dollars traded rose to $823.4 million from Thursday’s $723.1 million.

“The peso closed sideways today, while appreciating at the morning trade after the release of stronger Philippine inflation for April,” a currency trader said in a phone interview on Friday.

The increase in consumer prices accelerated in its fastest pace in five years in April, the Philippine Statistics Authority announced early Friday.

April inflation stood at 4.5%, faster than the 4.3% print the previous month while matching the median estimate in a BusinessWorld poll of 11 economists.

This was also near the upper band of the 3.9-4.7% target range set by the Bangko Sentral ng Pilipinas.

Meanwhile, another trader said the April inflation print “aggravated the selling because [Bangko Sentral ng Pilipinas] Governor [Nestor A.] Espenilla, Jr. was saying we’re getting closer to a rate hike.”

On Thursday, Mr. Espenilla told reporters on the sidelines of the Asian Development Bank annual meeting that the monetary authority will not hesitate to take “decisive” action should the inflation continues its ascent.

“What we react to is whether it’s spreading and it is affecting expectations. And our reading, based on the latest data, it seems to have spread somewhat,” the central banker said, referring to the inflation that is becoming broader than initially expected.

During the afternoon trading session meanwhile, the second trader said the peso lost its momentum as investors took profits ahead of the US non-farm payroll data to be released late Friday (Manila time).

“Given that the market awaits for the non-farm payroll data, there are investors who took profit so the went weaker.”

The other trader added that the peso depreciated in the afternoon trading “ahead of likely upbeat US non-farm payrolls and unemployment data.” — K.A.N. Vidal