Peso seen trading at stable range
The peso is expected to continue trading at its current range this week as investors calm down after normalizing the week before in one of the currency’s best weeks this year.
The local currency strengthened to 43.20 to $1 at the end of last week from 43.72 the previous week. The stronger peso followed the release of data that showed the US economy grew at 1.8 percent, slower than the 2.4-percent forecast.
BDO Unibank said in its weekly report that the peso would likely trade between 43 and 43.50 to $1 this week.
“Volatility reigned on the currency market following the US Fed’s message that it plans to taper its asset purchase plan,” BDO said.
“This move is seen as positive for the greenback. The appreciation could be attributed to normalizing dollar demand as the previous week’s demand was driven by portfolio outflows,” the bank said.
Analysts said that after the peso’s weaker performance in the past weeks, foreign investors started to realize the country’s strong economic fundamentals.
Earlier this week, the Bangko Sentral ng Pilipinas (BSP) said inflation in June might fall to its lowest in nearly four years amid stable food prices, which helped counteract a recent increase in utility rates and a weaker peso that made fuel products more expensive.
If inflation falls at the low end of the central bank’s forecast of 2 to 2.9 forecast, it would be the slowest rate of increasing prices since August 2009.
Last May, inflation settled at 2.8 percent, bringing average inflation since the start of the year to 3 percent.
