Advertisement

Peso to weaken vs dollar

Font Size

BW FILE PHOTO

THE PESO is seen to slide against the dollar this week due to upbeat US economic data as well as the expected interest rate hike by the US Federal Reserve.

On Friday, the local currency strengthened against the greenback, gaining 15 centavos to close at P50.50 on the back of positive sentiment on the government’s tax reform package.

Week on week, however, the peso weakened from its P50.37-per-dollar close last Dec. 1.

This week, analysts expect the peso to drop anew following positive US economic data.

“The dollar might continue to appreciate this week, driven by last Friday’s upbeat US employment reports and expectations of another interest rate hike from the US Federal Reserve on Dec. 14,” Guian Angelo S. Dumalagan, market economist of Land Bank of the Philippines, said in an e-mail over the weekend.

Mr. Dumalagan said the dollar may appreciate as investors react to positive US data ahead of the expected rate hike by the Fed at its policy meeting this week.

US non-farm payrolls rose by 228,000 jobs in November amid broad gains in hiring as distortions from recent hurricanes faded, Labor Department data showed on Friday. The government revised data for October to show the economy adding 244,000 jobs instead of the previously reported 261,000 positions.

“US unemployment rate also remained steady at its lowest level since February 2001, while US inflation is expected to show a stronger reading when it comes out on Wednesday,” Mr. Dumalagan noted. “In their (Fed) policy meeting, US officials might also affirm their prior guidance of three interest rates hikes next year.”

Meanwhile, a trader said the meeting of the European Central Bank (ECB) on Friday might reverse the dollar’s uptrend.

“The market is expecting the ECB to drop hints on an interest rate hike in 2018 so a stronger euro might reverse the [dollar’s ascent] on Friday,” a trader said over the phone on Friday.

Landbank’s market economist shared the same sentiment, saying: “[W]hile the ECB is unlikely to tweak its policy rates this month, it might hint of an interest rate hike in 2018, considering the steady trend of positive economic reports from the Euro Area since the start of 2017.”

Traders are expecting the peso to move between P50.25 and P50.90, while Mr. Dumalagan gave a slimmer range of P50.30 to P50.80.  Karl Angelo N. Vidal

1 COMMENT

Comments are closed.