Peso weakens vs dollar on strong US data

 Peso weakens vs dollar on strong US data

THE PESO declined on Wednesday due to strong US economic data. — BW FILE PHOTO

THE PESO weakened versus the greenback on Wednesday following upbeat US retail sales and industrial production data.

The local unit ended trading at P50.39 per dollar on Wednesday, depreciating by nine centavos from its P50.30 close on Tuesday, based on data from the Bankers Association of the Philippines.

The peso opened Wednesday’s session at P50.38 per dollar, weaker from its previous finish. Its worst showing was at P50.47, while its intraday best was at P50.34 versus the greenback.

Dollars exchanged decreased to $1.133 billion on Wednesday from $1.391 billion on Tuesday.

The peso depreciated on Thursday following the faster-than-expected recovery in US factory production, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The US Federal Reserve on Tuesday said manufacturing output expanded by 1.2% in October, the fastest pace since March 2019 and a turnaround from the 0.7% decline in September. It is also better than the 0.7% growth estimate of economists polled by Reuters.

Factory output increased by 4.5% year on year.

Another market lead was the better-than-expected US retail sales data also released overnight, a trader said in an e-mail.

The US Commerce department said October retail sales increased by 1.7%, which is its largest rise since March. It sealed the third straight monthly expansion and was better than the 1.4% growth expected by economists polled by Reuters.

The trader said the peso could continue to depreciate this Thursday due to cautious sentiment ahead of the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board’s policy rate decision.

A BusinessWorld poll of 20 analysts unanimously expect the BSP to keep benchmark rates steady to continue supporting the economy’s rebound as it has yet to firm up.

This Thursday, the trader gave a forecast range of P50.30 to P50.55, while Mr. Ricafort expects the local unit to move within P50.25 to P50.45 per dollar. — L.W.T. Noble with Reuters