Peso to climb further on US, local data

THE PESO is likely to rise this week with the market anticipating better trade deficit data and with the market factoring in the positive US jobs report released late last week.

The local unit closed at P50.755 per dollar on Friday, strengthening by 2.50 centavos compared to its P50.78 finish on Thursday, according to data from the website of the Bankers’ Association of the Philippines.

Week on week, the peso also appreciated by 7.50 centavos from the P50.83-to-a-dollar close on Jan. 31.

Analysts said BSP Governor Benjamin E. Diokno’s hints on another rate cut as well as fresh signals from Beijing and Washington on their commitment to their phase one deal likely boosted the peso.

Mr. Diokno told Bloomberg TV in an interview on Friday that another rate cut may be possible by the middle of the year.

“Peso exchange rate closed stronger after BSP Governor [Benjamin E. Diokno] signalled another rate cut possible by mid-2020, after yesterday’s cut in local policy rates, improving sentiment on the local financial markets,” Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in a text message.

For his part, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the peso’s strength came on the back of recent developments in the US-China trade deal.

“Market perception has slightly improved and more confident because of the reaffirmation to the commitment by both the US and China to their phase 1 deal,” Mr. Asuncion said in a text message.

For this week, analysts said among the factors that may affect exchange rates are some key economic data and the latest developments on the coronavirus outbreak.

“This [peso’s] strength is expected [to continue] next week with anticipated better trade data from last year,” Mr. Asuncion said.

“Major market leads that could have an impact on the peso include the latest US jobs data, Philippine trade deficit data, as well as latest developments on coronavirus,” RCBC’s Mr. Ricafort said.

The Philippine Statistics Authority will release the December trade deficit data on Feb. 11.

Both Mr. Ricafort and UnionBank’s Mr. Asuncion gave a forecast range of P50.60-P50.90 per dollar for this week. — L.W.T. Noble with Reuters