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THE PESO declined further against the dollar on Thursday due to slower-than-expected economic growth data and amid the market’s anticipation of the central bank’s policy decision.
The local unit closed yesterday’s session at P52.30 versus the greenback, down 19 centavos from the P52.11-per-dollar finish on Wednesday.
The peso opened the session weaker at P52.20 versus the dollar, slipping to as low as P52.35 intraday. Meanwhile, its best showing was at P52.145 per greenback.
Trading volume edged up to $1.038 billion from the $1.012 billion that switched hands the previous day.
Foreign exchange traders attributed the weaker peso to the release of data on first-quarter gross domestic product (GDP) growth, which came in slower than expected.
The Philippine Statistics Authority reported on Thursday the Philippine economy only grew 5.6% in the first quarter, slower than the revised 6.3% tallied in the fourth quarter and 6.5% in the same quarter last year.
“The peso was very volatile. It dropped to a low of P52.145 in the morning session. But when the GDP data came out weaker than expected, we saw the dollar-peso fly to P52.35,” a trader said in a phone interview.
The trader added that market participants “tried to take long positions” ahead of an expected rate cut from the Bangko Sentral ng Pilipinas (BSP).
After markets closed, the BSP announced that its policy-setting Monetary Board trimmed interest rates by 25 basis points, taking into consideration the decelerating inflation environment. However, the BSP didn’t decide on the adjustments on banks’ reserve requirement ratio.
For today, the first trader expects the peso to move between P52.15 and P52.45, while another trader gave a P52.10-P52.40 range.
“The US-China trade talks (will be the main driver), since market players already priced in the rate cuts. Now, we will have to wait and see regarding the progress of the US-China trade talks. All eyes on them,” the first trader noted. — KANV