THE PESO ended flat against the dollar on Tuesday following the February inflation print released earlier yesterday amid market jitters due to President Donald J. Trump’s protectionist policies.
The local currency ended Tuesday’s trading session at P52 against the greenback, trading flat from its finish on Monday.
The peso opened the session stronger at P51.885 per dollar, while its intraday high stood at P51.81. Its worst showing, meanwhile, was at P52.04 against the US currency.
Dollars traded rose to $808 million on Tuesday from the $565.5 million that changed hands in the previous session.
Traders interviewed yesterday said the peso moved sideways following the faster-than-expected inflation print in February.
“The peso moved sideways today as the market interpreted the 2006 and 2012-based Philippine inflation data [yesterday] as mixed readings relative to the BSP’s (Bangko Sentral ng Pilipinas) 4% inflation target,” a trader said in an e-mail on Tuesday.
The Philippine Statistics Authority (PSA) reported the country’s inflation sped up to 4.5% in February when using the 2006 prices as the base year, overshooting the 2-4% full-year target of the government and faster than the 4% inflation print the previous month as well as the 4.2% median inflation estimate among economists in a BusinessWorld poll.
When computed using 2012 as the base year, February inflation print stood at 3.9%, also faster than the 3.4% recorded in January.
The PSA attributed the faster uptick in general prices of goods and services to higher costs of food, beverages and tobacco.
Meanwhile, UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a text message that Mr. Trump’s protectionist stance also affected foreign exchange trading.
Mr. Trump said he is not backing down in pushing for the 25% tariff on imported steel and the 10% tariff on imported aluminum.
“To protect our [c]ountry we must protect American [s]teel! #AMERICA FIRST,” Mr. Trump said in a tweet on Monday.
For today, traders said the peso will move between P51.80 and P52.20 versus the dollar.
BSP Governor Nestor A. Espenilla, Jr. said the peso is unlikely to melt down as it is supported by the country’s healthy economic fundamentals.
“There will be volatility, runs and corrections, but the peso is not expected to meltdown because the underlying economic fundamentals of the economy are healthy,” Mr. Espenilla said in a speech yesterday.
The country’s central banker attributed the peso’s depreciation to the “continued bullish sentiment on the economy’s growth performance and prospects,” citing strong demand for imports, residents’ increased direct and portfolio investments abroad and debt prepayments by both the public and private sectors.
“All of these contributed to an increase in the demand for dollars and dollar-denominated assets,” Mr. Espenilla added. — Karl Angelo N. Vidal