THE PESO may start to appreciate versus the dollar this week on easing safe-haven demand due to rate hikes from global central banks.
The local unit closed at P52.32 per dollar on Friday, gaining 8 centavos from its P52.40 finish on Thursday, based on Bankers Association of the Philippines data.
However, it depreciated by 9 centavos from its P52.23 close on May 20.
The peso opened Friday’s session at P52.33 against the dollar. Its weakest showing was at P52.35, while its intraday best was at P52.23 versus the greenback.
Dollars exchanged increased to $1.05 billion on Friday from $986 million on Thursday.
The peso strengthened versus the dollar on Friday following positive market sentiment after most economic managers of the next administration were announced, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
On Thursday, President-elect Ferdinand “Bongbong” R. Marcos, Jr. announced that Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno will be his Finance secretary. Mr. Diokno will be replaced by Monetary Board member Felipe M. Medalla as central bank governor, while Arsenio M. Balisacan will be the next Socioeconomic Planning chief.
Mr. Marcos also named former University of the Philippines President Alfredo E. Pascual as the head of the Department of Trade and Industry, and Manuel M. Bonoan, who headed San Miguel Corp.’s tollway operations, as the head of the Department of Public Works and Highways.
Mr. Ricafort said the incoming members of the next administration are well respected by local and international investment communities due to their good track record.
He added that the local unit was also stronger after recent signals from the BSP for another rate hike in June.
For this week, easing safe-haven demands for currencies such as the dollar could cause the peso to strengthen, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.
Mr. Asuncion said that central banks in other countries would increase their benchmark interest rates to boost their local currencies and to curb inflation risks.
The BSP hinting another rate hike may lead to more comfortable interest rate differential with the US and other countries, Mr. Ricafort said.
Manufacturing Purchasing Managers’ Index (PMI) in May would also affect the peso, likely strengthening the local unit if the index stays at 53-54, Mr. Asuncion added.
The Philippine Manufacturing PMI improved to 54.3 in April from 53.2 in March, S&P Global Philippines said on May 2. The April reading was the highest since November 2017, when the PMI came in at 54.8.
The next PMI data release will be on Wednesday, June 1.
For this week, Mr. Asuncion gave a forecast range of P52.00-P52.50, while Mr. Ricafort expects the local unit to move within P52.10-P52.40 per dollar.