THE PESO rebounded on Wednesday after five straight days of depreciation as the market went profit taking a day before the release of data on the country’s growth for the fourth quarter.
The local unit finished trading at P50.91, stronger by 10.50 centavos from the previous day’s close of P51.015 per dollar.
The peso opened the day at P51.06 versus the dollar. Its intraday low was at P51.085, while its best showing against the dollar was at P50.86.
Dollars traded went down to $1.093 billion yesterday coming from $1.346 billion on Tuesday.
A trader and an analyst attributed the peso’s rebound to profit taking by investors as well as the market awaiting data on gross domestic product (GDP) growth to be reported this Thursday.
Socioeconomic Planning Secretary Ernesto M. Pernia earlier said GDP growth for the last quarter of 2019 might have been around 6.6-6.7%.
“The peso appreciated today as market participants opted to take profits near the 51-peso level,” a trader said in an e-mail on Wednesday.
“Investor sentiment seems to be tilted toward the anticipation of robust Q4 2019 GDP growth. Note that market consensus is 6.4% and for the 2019 full-year growth average is 5.9%,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a text message.
On Wednesday, the Philippine Statistics Authority (PSA) revised the third-quarter GDP growth figure to 6% from the previously reported 6.2%. The agency said that major contributors to the revisions were the revision in growth in sectors such as other services (4.2% from 5.1%), construction (15.4% to 16.3%), and the transport, storage, and communication (8.2% from 9.1%).
Economic growth in the first two quarters of 2019 stood at 5.6% and 5.5%, respectively. The government targets at least 6-6.5% growth pace for 2019.
For today, the trader expects the local unit to move around the P50.80-P51.00 level, while Mr. Asuncion gave a forecast range of P50.80-P51.10.
Meanwhile, Most Asian units were trading subdued on Wednesday as concerns about a coronavirus outbreak in China kept risk appetite on the backfoot, although the South Korean won found support amid upbeat GDP data on the trade-reliant economy, Reuters reported.
The death toll from a new flu-like coronavirus in China rose to nine on Wednesday with 440 confirmed cases, health officials said.
Sentiment, however, got a lift as China’s response to the outbreak tempered fears of a global pandemic.
The Chinese yuan steadied after weakening 0.6% in the previous session, although it still traded above the 6.9 level against the greenback.
Most analysts say fears of a repeat of the SARS virus outbreak in 2003 that plunged the region into economic chaos are unfounded, as countries are now better equipped to fight an epidemic.
“We do not see a huge reversal of Asian gains and expect merely modest unwinding of stretched positions,” analysts at Maybank wrote in a note.
However, investors are unlikely to embrace risky Asian assets anytime soon and will likely wait for further updates from Beijing before placing big bets.
The World Health Organization was set to meet later in the day to consider whether the outbreak is an international emergency.
The Thai baht flitted within a tight range as investors shrugged off data that showed the country’s customs-cleared exports in December dropped 1.28% from last year, but came in better than as forecast in a Reuters poll.
The Korean won, while more sensitive to export numbers, traded 0.3% stronger after data showed that a surge in government spending helped the economy post its fastest quarterly growth in more than two years. — L.W.T. Noble with Reuters