THE PESO strengthened on Wednesday to return to the P51-per-dollar level following a wider trade deficit seen in February.
The local currency ended yesterday’s session at P51.945 against the greenback, 6.5 centavos stronger than its P52-per-dollar finish on Tuesday.
The peso traded stronger the whole day, opening the session at P51.92 against the greenback. The local unit rose to as high as P51.91 intraday, while its worst showing stood at just P51.965 to a dollar, data from the Bankers Association of the Philippines showed.
Dollars traded rose to $583.6 million from the $570.64 million recorded the previous day.
“The peso appreciated following the trade deficit data released this morning,” a trader said in an e-mail on Wednesday.
The country’s balance of trade widened to a $3.06 billion deficit in February as exports contracted while the imports continued to widen, data from the Philippine Statistics Authority showed.
Exports declined 1.8% to $4.66 billion in February, a turnaround from the previous month’s revised 3.5% growth and the 8.7% growth in the same month last year. This was the worst turnout since the 4.5% decline logged in November 2016.
On the other hand, the country’s import bill rose 18.6% to $7.72 billion in February, faster than the 11.4% seen in the previous month and 15.2% in February 2017.
“[The local currency] barely moved but the downward pressure on the trade deficit is consistent with the peso,” said UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion in a text message, adding that high demand for dollars to finance imports will also affect the peso trading.
However, another trader said the trade deficit data was not factored in by the investors.
“When the data came out this morning, the reaction on the dollar-peso was very muted. I don’t think the market really cared as much,” the trader said on Wednesday, adding that the market stayed on the sidelines ahead of the US consumer price index data set for release last night.
For today, the second trader expects the peso to move between P51.90 and P52.10, while the first trader gave a wider range of P51.80 to P52.10.
“The peso might shed its gains on expectations of stronger inflation from the US and on likely hawkish cues from the March Fed minutes that will be released early [today], the first trader noted.
Most other emerging Asian currencies also crept higher against the dollar on Wednesday as Beijing moved to ease tensions with the US. — Karl Angelo N. Vidal with Reuters