THE PESO climbed against the dollar on Tuesday after Philippine headline inflation cooled to an over five-year low last month.
The local unit closed at P55.61 per dollar on Tuesday, strengthening by 16 centavos from its P55.77 finish on Monday, Bankers Association of the Philippines data showed.
The peso opened Tuesday’s trading session weaker at P55.80 against the dollar. Its worst showing was at P55.90, while its intraday best was at P55.51 versus the greenback.
Dollars exchanged inched down to $2.28 billion on Tuesday from $2.296 billion on Monday.
The slower-than-expected April inflation print supported the peso on Tuesday, both Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort and a trader said.
Headline inflation in April sharply decelerated to its slowest print in since November 2019 amid easing food prices, the Philippine Statistics Authority (PSA) reported on Tuesday.
The consumer price index (CPI) stood at 1.4% in April, easing from 1.8% in March and 3.8% in the same month a year ago.
This was within the 1.3% to 2.1% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month and well below the 1.8% median estimate in a BusinessWorld poll of 14 analysts conducted last week.
For the first four months, the CPI averaged 2%, at the low end of the BSP’s 2-4% annual target.
“Trade optimism also kept on weighing on the dollar as the market monitors progress on the trade talks and ahead of the FOMC (Federal Open Market Committee) meeting this week,” the trader added.
For Wednesday, the trader expects the peso to move between P55.50 and P55.80 against the greenback, while Mr. Ricafort sees it ranging from P55.50 to P55.70.
The dollar dipped against major peers on Tuesday as concerns about tariffs and their impact on the economy lingered, while focus was turning to the Federal Reserve’s policy announcement on Wednesday, Reuters reported.
Investor attention has been on the possibility of easing trade tensions between the US and China after Beijing last week said it was evaluating an offer from Washington to hold talks over tariffs.
US President Donald J. Trump said on Sunday that Washington is meeting with many countries, including China, and that his main priority with China is to secure a fair deal.
But with few details coming out about trade discussions, investors have been left trying to make sense of headlines coming out of the White House.
Mr. Trump’s erratic trade policies have fueled significant waves of dollar selling since April as investors shifted away from US assets, pushing the euro, yen and Swiss franc higher.
The euro on Tuesday was up 0.3% against the dollar at $1.1347, and the yen was up 0.5% at 142.95 per dollar.
That dollar selling has spread to other Asian foreign exchange (FX), underscored by the Taiwan dollar’s record surge in recent sessions, which has stoked speculation that a revaluation of regional foreign exchange was possible to win US trade concessions.
Its rally suggested a big unwinding was under way and shone a light on one economy, among many, where years of big trade surpluses have built up large long dollar positions at exporters and insurers that are now under question and on edge.
The Taiwan dollar was fairly sedate on Tuesday last fetching 30.28 per US dollar, not far from the near three-year high of 29.59 it touched on Monday.
The focus turned to Hong Kong on Tuesday, where the de facto central bank bought $7.8 billion to stop the local currency from strengthening and breaking its peg to the greenback.
“The real action today is in Asian FX,” said Charu Chanana, chief investment strategist at Saxo in Singapore.
“If these currencies keep strengthening sharply, it could spark fears of a ‘reverse Asian currency crisis,’ with potential ripple effects in the bond market amid fears that Asian institutions reassess their unhedged exposure to Treasury holdings.” — Aaron Michael C. Sy with Reuters
