June 29, 2022

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Peso climbs on Diokno remarks, China lockdown

2 min read

THE PESO strengthened versus the dollar on Tuesday as the central bank said it is ready to act preemptively to anchor inflation expectations.

The local unit closed at P51.19 per dollar on Tuesday, gaining 19 centavos from its P51.38 finish on Monday, based on Bankers Association of the Philippines data.

The peso opened Tuesday’s session at P51.32 per dollar. Its weakest showing was at P51.355, while its intraday best was at P51.14 against the greenback.

Dollars exchanged rose to $1.303 billion on Tuesday from $1.208 billion on Monday.

A trader said the peso appreciated after the central bank chief said the Bangko Sentral ng Pilipinas (BSP) is ready to act to combat rising inflation expectations.

“We are prepared to take preemptive action as needed if inflation expectations become at risk or disanchored,” Mr. Diokno said at the Philippine Economic Briefing held in Pasay City on Tuesday.

For now, the BSP chief said their stance remains appropriate and they are eyeing a rate adjustment in the second half.

Mr. Diokno’s remarks came following the release of inflation data, which showed it quickened to 4% from 3% in February.

He said they will remain vigilant against possible second-round effects from supply-side pressures or shifts in inflation expectations.

The central bank kept rates steady for the 11th straight meeting last month, even as it raised its inflation forecast for the year to 4.3% which is already above the 2-4% target.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said the peso strengthened amid an increase in infections in China that has caused lockdowns, as this could help temper fuel demand, with Beijing being the world’s biggest oil importer.

For Wednesday, both Mr. Ricafort and the trader gave a forecast range of P51.10 to P51.30 versus the dollar. — LWTN

Neil

2022-04-05 09:00:48

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