Peso drops ahead of US CPI report
THE PESO weakened against the dollar on Tuesday as the market was cautious ahead of the release of the January US consumer price index (CPI) report overnight.
The local currency closed at P54.83 versus the greenback on Tuesday, declining by seven centavos from Monday’s P54.76 finish, Bankers Association of the Philippines data showed.
The peso opened Tuesday’s trading session at P54.67 per dollar. Its intraday best was at P54.64, while its weakest showing was at P54.96 against the greenback.
Dollars traded went down to $848.27 million on Tuesday from $955.85 billion on Monday.
“The peso depreciated on market caution ahead of the US consumer inflation report for January 2023 due for release tonight,” a trader said in a Viber message on Tuesday.
A strong CPI reading could drive expectations of tighter monetary policy from the US Federal Reserve.
The US central bank hiked its fed funds rate by 25 basis points (bps) to a range between 4.5% and 4.75% at its Jan. 31 to Feb. 1 meeting. This brought cumulative increases since March 2022 to 450 bps.
The Fed’s next policy review is on March 21-22.
Meanwhile, the local stock market gauge’s decline also dragged the local currency down, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The bellwether Philippine Stock Exchange index dropped by 47.52 points or 0.69% to close at 6,791.24 on Tuesday.
For Wednesday, the peso is likely to move depending on the US CPI report, the trader said.
The trader sees the peso moving from P54.65 to P54.90, while Mr. Ricafort expects it to trade between P54.75 and P54.95 per dollar. — A.M.C. Sy