THE PESO rallied to log its best close against the greenback since 2016 on expectations of continued benign inflation, even as prices of some commodities went up.
The local unit closed at P49.381 versus the dollar on Monday, gaining 16.9 centavos from its P49.55 close on Friday, data from the Bankers Association of the Philippines showed.
The peso opened the session at P49.52 per dollar. Its weakest showing was at P49.55 while its intraday best was at P49.36 against the greenback.
Dollars traded decreased to $609.77 million on Monday from the $758.3 million on Friday.
Analysts attributed the peso’s appreciation to manageable inflation despite expectations of a slight quickening in June.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso finished at its strongest “in more than 3.5 years or since Nov. 16, 2016 when it closed at P49.35” as investors await the release of June inflation data by the Philippine Statistics Authority this Tuesday, July 7.
A BusinessWorld poll of 16 economists yielded a median estimate of 2.2% for headline inflation in June, slower than the 2.7% a year ago but a tad faster than the 2.1% pace in May. Analysts said upward pressures mainly come from rising prices of oil and rice.
If realized, the median estimate would be near the lower end of the 1.9% to 2.7% estimate from the Bangko Sentral ng Pilipinas and well within the 2-4% target inflation for 2020.
“The peso continued to strengthen amid expectations of an uptick in the Philippine inflation report this Tuesday,” a trader said in an e-mail.
The trader said the actual inflation data on Tuesday will also determine market sentiment this Tuesday.
For today, both Mr. Ricafort and the trader see the peso moving within P49.25 to P49.45 per dollar. — LWTN