August 8, 2022

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Peso may strengthen further vs dollar

2 min read

THE PESO may appreciate versus the dollar this week as the Bangko Sentral ng Pilipinas (BSP) chief remained hawkish despite the US Federal Reserve’s dovishness, but expectations of faster Philippine inflation in July could dampen sentiment.

The local unit closed at P55.13 per dollar on Friday, surging by 69 centavos from its P55.82 finish on Thursday, based on Bankers Association of the Philippines data.

It also strengthened by P1.15 from its P56.28-per-dollar finish a week earlier.

Dollars exchanged rose to $1.57 billion on Friday from $1.27 billion on Thursday.

The peso strengthened on Friday following softer US economic growth in the second quarter that fueled recession fears, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The US Commerce department on Thursday said gross domestic product (GDP) fell at a 0.9% annualized rate last quarter amid aggressive monetary policy tightening by the Federal Reserve to quell high inflation.

The Fed raised rates by 75 basis points (bps) for a second straight meeting last week.

The dollar weakened as comments from Fed chief Jerome H. Powell after their July 26-27 meeting were seen as dovish, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

The Fed’s decision to deliver a third straight increase of 75 bps at its Sept. meeting will be guided by whether they see firm evidence of inflation beginning to subside, Mr. Powell said last week.

“The peso also stronger recently after global crude oil prices hovered among the lowest in about three months… alongside the downward correction in other global commodity prices that could help ease inflationary pressures and lower the country’s oil import bill,” Mr. Ricafort added.

For this week, Mr. Asuncion said the Fed’s dovish tone could cause the dollar to decline. With the BSP continuing to be hawkish, this could support the peso, he said, along with lower oil prices.

However,…

Neil

2022-07-31 10:22:43

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