Peso slips vs dollar on Fed, GDP report

THE PESO inched down due to hawkish comments from US central bank officials and second-quarter economic growth data. — BW FILE PHOTO

THE PESO ended sideways versus the dollar on Tuesday amid hints of a possible tapering by the US Federal Reserve this year and as data showed the Philippine economy exited recession in the second quarter.

The local unit closed at P50.395 per dollar on Tuesday, depreciating by a centavo from its P50.385 finish on Monday, based on data from the Bankers Association of the Philippines.

The peso opened Tuesday’s session at P50.39 versus the dollar. Its weakest showing was at P50.45, while its intraday best was at P50.34 against the greenback.

Dollars traded increased to $898.6 million on Tuesday from $682.88 million on Monday.

The peso inched down after Fed officials said the US central bank could start dialing back its asset purchases this year.

Reuters reported that Atlanta Federal Reserve Bank President Raphael Bostic said they could start tapering bond purchases by the fourth quarter and could even begin earlier if employment data continue to improve. He added that he expects rate hikes to start by late 2022. Mr. Bostic and Richmond Fed President Tom Barkin both believe inflation has already achieved the Fed’s 2% threshold.

The country’s second-quarter economic performance, which ended a five-quarter technical recession, also affected peso-dollar trading on Tuesday, a trader said.

Gross domestic product (GDP) grew by 11.8% in the second quarter, a turnaround from the 17% contraction in the comparable year-ago period, the Philippine Statistics Authority reported on Tuesday. This also exceeded the 10.6% median GDP growth estimate of 20 analysts in a BusinessWorld poll last week.

This brought the first semester GDP growth print to 3.7%, still below the government’s 6-7% target.

This Wednesday, Mr. Ricafort gave a forecast range of P50.30 to P50.45 per dollar, while the trader expects the local unit to move within P50.30 to P50.50. — LWTN with Reuters

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