Peso rallies on positive US data

THE peso strengthened against the greenback on Tuesday on US data suggesting signs of economic recovery and month-end transactions.

The local unit closed at P49.83 versus the dollar yesterday, appreciating by 2.5 centavos from its P49.855 close on Monday, data from the Bankers Association of the Philippines showed.

The peso opened the session at P49.75 per dollar. Its weakest showing was at P49.84 while its intraday best was at P49.74 against the greenback.

Dollars traded dropped to $642.73 million on Tuesday from the $819.22 million recorded on Monday.

Data on US home sales suggesting the housing market is starting to recover was positive for the peso, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

“The record month-on-month rise in the US pending home sales data party supported the latest market gains,” he said in a text message, noting the local unit was at its strongest in nearly four weeks or since its P49.80-per-dollar close on June 5.

Data from the National Association of Realtors on Monday showed the pending home sales index, based on contracts to buy previously owned homes, surged by 44.3% to 99.6 in May which was its largest increase since 2001, Reuters reported.

The peso also gained on the back of “month-end dollar transactions”, a trader said in an email.

However, the trader said the currency might weaken this Wednesday “amid increasing geopolitical tensions abroad”.

China on Tuesday passed the controversial national security legislation for Hong Kong, which critics have slammed for being a threat to freedoms in the special administrative region.

The US Commerce Department on Monday said it was halting its “preferential treatment to Hong Kong over China, including the availability of export licence exceptions”.

For today, Mr. Ricafort gave a forecast range of P49.70 to P49.95 per dollar while the trader expects the peso to move around the P49.75 to P49.95 band. — L.W.T. Noble with Reuters