Peso back at P51:$1 level

THE PESO dropped to the P51 level anew, as markets expect strong US inflation data that may prompt the Federal Reserve to raise its policy rates for a third time this year.

The local currency closed at P51.165 against the greenback on Thursday, 19 centavos weaker than the P50.975 recorded in the previous trading session.

Yesterday’s close was the weakest logged since Aug. 31’s P51.17-a-dollar close.

The peso immediately breached the P51 per dollar level as the market opened, starting the session at P51.11. The local unit’s strongest showing for the day was at P51.09, while its intraday low was at P51.19 versus the greenback.

Dollars traded grew to $633.55 million from the $610.4 million that changed hands the previous session.

Traders said markets were bullish on US inflation data scheduled for release later in the day, with a strong turnout to increase the possibility of a third Fed rate hike before the year closes.

“We closed above the critical P51 level, we gapped up the morning. Market was very bullish from the get-go and I think we’re anticipating that hopes for a December Fed rate hike are alive and kicking,” a trader said in a telephone interview yesterday.

“And I think it’s a chance for us to buy at a bargain. So the market is very very bullish,” the trader added.

If the inflation report turns out to be within expectations, the dollar’s momentum would continue, the trader said.

“I think it depends on the data if it does come out 1.8%. We’re gonna see the greenback trade even higher. If it disappoints, we might see a fall back below P51 figures.”

Another trader said there was demand for dollars as the US government revived talks on President Donald J. Trump’s tax reform program.

“The weaker peso was due to higher dollar overnight. Because the talks on the US tax reform, was revived, so dollar traded higher.”

Another trader said corporate demand for the dollar also contributed to the peso’s decline.

“I think there was also corporate demand. But it’s nothing unusual. Volume is still within limit.” — Elijah Joseph C. Tubayan