THE PESO declined against the dollar on Tuesday as the market looked ahead to the inflation data to be released today.
The local unit closed at P52.52 versus the greenback yesterday, down 20 centavos from the P52.32-per-dollar finish on Monday.
The peso traded weaker the whole day, opening the session at P52.515 per dollar. Its intraday trough stood at P52.60, while its best showing was at P52.49 against the US currency.
Dollars traded surged to $1.058 billion from the $965.6 million that switched hands the previous day.
Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said the peso depreciated as “the market is carefully waiting for price level movement [data] for November.”
Inflation is widely expected to have slowed in November from a nine-year peak as oil prices declined and as food supply improved, analysts said in a BusinessWorld poll.
A survey of 14 economists yielded a 6.3% median estimate for headline inflation last month, slower than the actual print of 6.7% recorded in October and September.
The estimate also falls within the 5.8-6.6% estimate range given by the Bangko Sentral ng Pilipinas.
“The peso was more of a laggard since market players are waiting for the inflation data,” another trader said.
The second trader said the peso depreciation was due to offshore selling wherein market participants unwind their short position due to the uncertainty for the data.
“Although the market is pointing for a slower inflation number, the specific number of 6.2% is too low,” the trader noted, citing the median estimate in a Reuters poll. “So I think positioning will be done after the data.”
The Philippine Statistics Authority will report official inflation data today.
For Wednesday, the trader expects the peso to trade between P52.30 and P52.50 versus the dollar, while Mr. Asuncion gave a wider P52.10-P52.50 range.
“I think the continuation of the peso’s strengthening will be confirmed if the inflation number is in line with the expectation or lower,” the second trader added. — Karl Angelo N. Vidal
Article source: https://www.bworldonline.com/peso-weakens-ahead-of-inflation-report/