THE PESO appreciated versus the greenback on Monday to track gains in the stock market and with players already pricing in faster inflation.
The local unit closed at P51.38 per dollar on Monday, gaining 29 centavos from its P51.67 finish on Friday, based on data from the Bankers Association of the Philippines.
The peso opened the session at P51.60 versus the dollar, which was also its weakest showing for the day. Meanwhile, its intraday best was at P51.31 against the greenback.
Dollars exchanged declined to $1.208 billion on Monday from $1.33 billion on Friday.
The peso appreciated on Monday as it tracked gains in the stock market, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The benchmark Philippine Stock Exchange index rose by 10.33 points or by 0.14% to close at 7,163.21 on Monday, while the broader all shares index also increased by 8.95 points or 0.24% to 3,797.54.
Mr. Ricafort said market sentiment improved as global oil prices have declined from the highs seen at the beginning of the Russia-Ukraine war.
Oil rose above $105 a barrel on Monday as concern about tight supply arising from the war in Ukraine and the lack of an Iranian nuclear deal persisted despite countries releasing oil from strategic reserves, Reuters reported.
Last week oil prices slid by 13%, their biggest weekly fall in two years, after US President Joseph R. Biden announced the largest-ever US oil reserves release.
Meanwhile, a trader in an e-mail said the peso appreciated as the market has already factored in faster inflation and anticipate more hawkish signals from the central bank.
A BusinessWorld poll of 18 analysts yielded a median estimate of 4% for March inflation, nearer the upper end of the central bank’s 3.3% to 4.1% projection.
If realized, this would match the upper end of the 2-4% target of the Bangko Sentral ng Pilipinas (BSP) and would be faster than the 3% in February.
The Philippine Statistics Authority will report March inflation data on Tuesday.
BSP Governor Benjamin E. Diokno last week signaled the key policy rate could reach up to 2.75% by next year.
The central bank has kept its key rate untouched for the 11th straight meeting last month despite warning that its inflation target might be breached this year due to surging global oil prices brought by the Russia’s invasion of Ukraine.
For Tuesday, Mr. Ricafort gave a forecast range of P51.25 to P51.50, while the trader expects the local unit to move within P51.30 to P51.50 per dollar. — L.W.T. Noble with Reuters