Advertisement

Peso rebounds on lower-than-expected inflation

Font Size

peso dollar bills

By Melissa Luz T. Lopez, Senior Reporter

THE peso recovered on Friday as market players reacted to a lower-than-expected inflation reading for September, which helped ease negative sentiment towards the local currency.

The local unit ended the week at P54.23 against the dollar, nine centavos stronger than the P54.32 close on Thursday. This is the peso’s strongest showing since Wednesday’s P54.18-per-dollar finish.

The peso opened at P54.30 versus the greenback, marking a mild rebound from the previous day’s rate. It briefly touched P54.33 as its intraday peak but also settled at P54.23 as its best performance until market close.

Sought for comment, two traders attributed the rebound of the peso to positive market response following a 6.7% inflation rate in September.

“The peso strengthened following the release of softer-than-expected September headline inflation reading today,” one trader said via e-mail.

The latest inflation print settled lower than market expectations of a 6.8% inflation for the month, but still climbed to a fresh nine-year high as it maintained an ascent since the year opened.

The rate settled higher than August’s 6.4% pace as well as the three percent tallied in September 2017, and fell within the 6.3-7.1% forecast range given by the Bangko Sentral ng Pilipinas Department of Economic Research.

Prices of food and non-alcoholic drinks saw the fastest increase at 9.7%, followed by an 8% increase in transport costs and a 4.6% pickup in housing and utility rates, the Philippine Statistics Authority reported. In particular, rice prices surged by 10.4% in September, faster than a 7.1% increase the previous month.

All other components of the consumer basket saw prices rise, except for education-related expenses which slid by 3.8% from a year ago.

Inflation averaged five percent for the first nine months, still below the latest central bank forecast of 5.2% but well beyond the 2-4% target for the entire 2018.

Following the reprieve from the inflation figure, the second trader pointed out that markets are now watching out for latest nonfarm payrolls data in the United States due Friday night.

Strong labor figures would strengthen the decision of the Fed to raise interest rates for a third time this year, while a disappointing turnout may halt such plans.

Dollars traded on Friday amounted to $592.5 million, lower than the $893.1 million which exchanged hands the previous trading day.