By Aaron Michael C. Sy, Reporter
THE PESO could remain range-bound against the dollar this week as the market awaits the US deadline for trade negotiations.
“The dollar-peso traded higher on dovish signals from the Bangko Sentral ng Pilipinas (BSP) versus reinforced bets that the Fed will not cut by July, resulting in a narrowing interest rate differential,” a trader said by telephone.
The peso closed at P56.40 a dollar on Friday, weakening by 15 centavos from a day earlier, according to Bankers Association of the Philippines data posted on its website. Week on week, it gained 17 centavos.
BSP Governor Eli M. Remolona, Jr. last week said there is room for two more rate cuts this year as inflation remains benign and to support growth.
The BSP last month cut the benchmark rate by 25 basis points (bps) to 5.25% amid an easing inflation outlook and weaker-than-expected first-quarter economic growth.
The Development Budget Coordination Committee (DBCC) trimmed the Philippines’ gross domestic product (GDP) growth target to 5.5-6.5% this year, down from the earlier 6-8% forecast, citing heightened global uncertainties from US trade policy shifts and war in the Middle East. For 2026 to 2028, the DBCC also narrowed the growth forecast to 6-7%, from 6-8%.
June inflation rose to 1.4% from 1.3% in May, still below 3.7% last year. This was the fourth straight month inflation stayed below the Bangko Sentral ng Pilipinas’ 2-4% target. Year-to-date inflation averaged 1.8%.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the peso was also dragged by reduced expectations of a rate cut by the US central bank due to stronger-than-expected job data.
This bolstered expectations that the US Federal Reserve would keep interest rates steady to tame inflation.
Atlanta Fed President Raphael Bostic has said it could take a year or more for the US economy to adjust to the Trump administration’s tariff and other policies.
The labor market showed unexpected strength as data released last week revealed that US companies added 147,000 jobs in June — surpassing expectations — while the unemployment rate fell to 4.1%, Reuters reported.
The figures signal continued resilience in the US economy despite uncertainty over looming tariff hikes.
This week, markets will be watching for the finalized list of US tariff rates with key trading partners, scheduled for release on July 9.
US President Donald J. Trump has said Washington would begin notifying countries on Friday of the specific tariff rates they would face on exports to the US — marking a shift from previous promises to negotiate individual trade deals ahead of the July 9 deadline, when tariffs could increase significantly.
He added that “a couple” more trade agreements were expected after a recent deal with Vietnam. The US has reached framework agreements with China and Britain.
Meanwhile, US Treasury Secretary Scott Bessent said a trade deal with India was nearing completion. However, progress has stalled on agreements with Japan and South Korea, both of which had been identified by the White House as priorities.
As for the foreign exchange market, a trader said the peso is expected to trade at P56.20 to P56.80 a dollar this week. Mr. Ricafort forecasts a slightly tighter range of P56.20 to P56.70.
