THE PESO inched lower against the dollar for the third straight session on Wednesday after the country’s economic managers narrowed its growth target for the year.
The local unit closed at P52.355 per dollar, weakening by 3.5 centavos from its P52.32 finish on Tuesday, based on data from the Bankers Association of the Philippines.
The peso opened Wednesday’s session at P52.34 against the dollar. Its best showing was at P52.30, while its intraday low was at P52.38 versus the greenback.
Dollars exchanged declined to $804.2 million on Wednesday from $1.02 billion on Tuesday.
The weaker peso was also likely due to the Development Budget Coordination Committee’s (DBCC) downgraded gross domestic product (GDP) growth target for 2022, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The DBCC adjusted its macroeconomic assumptions, fiscal program and growth targets for 2022 to 2025 to consider recent domestic trends and external developments.
The full-year 2022 growth target was revised to 7-8% from 7-9% and the average inflation rate assumption was raised to 3.7-4.7% from 2-4% previously, reflecting the impact of soaring oil and food prices caused by the ongoing Russia-Ukraine war and supply chain disruptions.
Philippine GDP expanded by a better-than-expected 8.3% in the first quarter, surpassing the pre-pandemic output level as household spending surged amid the easing of coronavirus curbs.
This was a turnaround from the 3.8% contraction in the same period last year. It was also faster than the revised 7.8% growth in the fourth quarter of 2021. The first-quarter growth was the highest in three quarters or since the 12.1% seen in the second quarter of 2021.
Inflation climbed to 4.9% in April, the highest in more than three years, as oil and commodity prices soared amid the Russia-Ukraine war and supply chain disruptions.
On the other hand, the DBCC said it kept the GDP growth target of 6-7% for 2023 to 2025.
However, the DBCC is expecting inflation to return to the 2-4% target range for 2023 to 2025.
The body also revised its revenue projections upward as it expects economic activity to continue improving over the medium term.
Meanwhile, a trader said in an e-mail that the local unit “weakened ahead of hawkish expectations prior to the release of the Federal Reserve policy minutes overnight.”
Still, the peso might rebound amid expectations of continued weakness in the second estimate of the first quarter US GDP report, the trader said.
For Thursday, the trader gave a forecast range of P52.25 to P52.45 versus the dollar. — KBT