Peso weakens as investors price in inflation bets

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A TELLER counts $100 bills at a money changing establishment. — PHILSTAR/KRIZJOHN ROSALES

THE PESO weakened further against the dollar on Tuesday as investors continued to price in a likely faster September inflation print.

The local unit ended Tuesday’s session at P54.25 versus the greenback, 14 centavos weaker than the P54.11-per-dollar finish on Monday.

The peso traded weaker the whole day, opening the session at P54.18 against the dollar, which was its best showing for the day. Its intraday low stood at P54.29 versus the US currency.

Dollars traded rose to $655.4 million from the $385.7 million that switched hands the previous day.

Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said downward pressure is expected for the peso this week until the release of September inflation number.

“The market, I think, is slowly pricing the expectations in,” Mr. Asuncion said in a text message.

The market expects a faster inflation print last month from August’s 6.4%. A BusinessWorld poll of 13 economists yielded a 6.8% median forecast for headline inflation last month, matching the estimate given by the Bangko Sentral ng Pilipinas’ Department of Economic Research.

“The peso depreciated amid lingering expectations of stronger local inflation reading for September…which increased safe-haven demand for the dollar,” a trader said in an e-mail.

Meanwhile, another trader said the peso weakened due to corporate demand.

“We saw some corporate demand as it was the reason why the peso was pushed to around P54.29,” she said in a phone interview, noting that the level of resistance around P54.30-P54.35 still remained.

For Wednesday, Mr. Asuncion expects the peso to move between P54.20 and P54.50 versus the dollar, while the second trader gave a P54.10-P54.30 forecast.

PESO RECOVERY SEEN
Meanwhile, Sun Life of Canada (Philippines), Inc. expects the local unit to end the year stronger at P53.80 on the back of dollar inflows.

Michael Gerard D. Enriquez, Sun Life Financial chief investments officer, said San Miguel Food & Beverage, Inc. is expected to enter the local bourse in November to raise $150 million.

“Half of that will be sold to investors, so we would expect inflow of dollars to come in by next month,” Mr. Enriquez said.

The capital inflow, he added, will be coupled with the surge in remittances from overseas Filipinos in time for the holiday season.

“The seasonality where [overseas Filipino worker] remittances will be heightened. Towards the last two months of the year. So we would expect the peso to strengthen from where it is at the moment because of these things.” — Karl Angelo N. Vidal