THE PESO strengthened versus the greenback on Thursday following slower-than-expected core inflation in the US and the increase in the Philippine dollar reserves.
The local unit closed at P48.50 per dollar yesterday, appreciating by 10 centavos from its P48.60 finish on Wednesday, data from the Bankers Association of the Philippines showed.
The peso opened Thursday’s session at P48.57 per dollar. Its weakest showing was at P48.59 while its strongest was at P48.465 versus the greenback.
Dollars traded slumped to $792.65 million yesterday from $1.015 billion the day prior.
The peso gained following positive inflation data out of the United States, a trader said.
“The peso strengthened as global inflation concerns eased following the weaker-than-expected US core inflation report for February 2021,” the trader said in an email.
US core inflation rose 1.3% on a year on year basis in February, easing from the 1.4% print in January, Reuters reported. The core consumer price index, which excludes volatile food and energy components, inched up 0.1% month on month in February after being steady from December to January.
Meanwhile, US headline inflation rose 1.7% year on year last month, quicker than the 1.4% in January. This was mainly due to higher oil and food prices.
The US Federal Reserve has hinted it would tolerate higher prices as long as inflation remains below its two percent target.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the peso’s appreciation versus the dollar to the increase in the country’s gross international reserves.
BSP Governor Benjamin E. Diokno told reporters in a Viber message that dollar reserves reached $109.1 billion as of end-February. This is higher by 0.27% from the $108.799 billion seen as of January and by 23.7% from the $88.187 billion logged at end-February 2020.
The trader gave a forecast range of P48.40 to P48.60 per dollar while Mr. Ricafort expects the local unit to move within the P48.45 to P48.55 band. — LWTN with Reuters