Advertisement

Peso inches up on inflation data

Font Size

THE PESO closed barely changed for the third straight session yesterday, picking up slightly as the dollar grew weaker across a host of currencies and with domestic inflation boosting confidence towards the currency.

The local unit closed at P51.14 against the greenback on Tuesday, slightly picking up from its P51.165 finish last Monday.

The peso traded generally stronger yesterday as it opened at P51.13. It briefly touched P51.15-per-dollar as its intraday low, and even reached P51.05 as its best showing before settling at the closing rate.

Two traders interviewed yesterday said the local currency saw relatively quiet trading yesterday as it moved within the same range amid lack of fresh leads.

“We continued to see a weaker dollar across the board, trading at softer tone… The main market focus still are any developments with North Korea. Market players are looking for a new catalyst,” the first trader said by phone.

Seoul media reports said Pyongyang was moving another intercontinental ballistic missile towards its west coast yesterday, which follows its sixth nuclear test involving a hydrogen bomb over the weekend that escalated geopolitical tensions anew.

Both traders also pointed out that the faster inflation for August announced yesterday may have boosted appetite for the local currency.

“The peso appreciated today as stronger-than-expected domestic inflation increased the chances of a rate hike from the BSP this year,” the second trader said on Tuesday. “Moreover, the local currency also gained due to easing concerns over the missile program of North Korea.”

Prices of widely-used goods and services picked up by 3.1% in August, faster than the 2.8% logged in July and the fastest since April, according to the Philippine Statistics Authority.

Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said the latest inflation print falls within the central bank’s expectations as it logged between the 2-4% target band. Year-to-date, inflation has averaged 3.1%, just a tad lower than the BSP’s 3.2% estimate for the entire year.

Both traders expect the peso to remain within its current range for today. The first trader expects the currency to trade within P51 to P51.20 versus the dollar, while the second sees a slightly higher range at P51.05-P51.25.

Most Asian currencies also edged up on Tuesday as a bit of appetite for risk returned one day after trading volumes were slashed by North Korea’s most powerful bomb test.

“Beyond the initial dips in risk assets and bids in safe havens early Monday, market sentiment has proved to be fairly resilient, rightly seeing through the current North Korean tensions as a continuous drama that waxes and (usually) wanes,” Mizuho Bank said in a research note.

The Singapore dollar inched up against the US dollar, after a survey showed activity in the export-heavy economy’s factories expanding at its fastest pace in almost three years in August.

The South Korean won edged up slightly against the dollar after falling to a near two-week low on Monday, the day after North Korea tested what it said was an advanced hydrogen bomb for a long-range missile.

The Thai baht and the Indian rupee edged down slightly. — Melissa Luz T. Lopez with Reuters