Peso seen to move sideways on holiday spending

THE PESO is expected to move sideways this week on the further increase of holiday spending, especially as trading reaches the tail-end of the season.

The local unit closed at P55.15 per dollar on Friday, weakening by six centavos from its P55.09 finish on Thursday, Bankers Association of the Philippines data showed.

However, week on week, the peso strengthened by 41 centavos from its P55.56 close on Dec. 16.

The peso opened Friday’s session weaker at P55.25 per dollar. It dropped to as low as P55.35, while its intraday best was at P55.15 against the greenback.

Dollars exchanged jumped to $1.02 billion on Friday from the $774.2 million recorded on Thursday.

A trader said in a Viber message that the peso weakened on Friday against Thursday’s strong dollar close after a positive revision in US gross domestic product (GDP) data.

“Initially, [dollar-peso rate] was even higher to reflect [Thursday’s] broad dollar strength following US GDP data,” the trader said.

According to a report by Bloomberg, the US government revised its GDP estimate for July to September to 3.2% on Thursday, from the previous estimate of 2.9%. This came after an upward revision of consumer spending and business investment.

For this week, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso would still be affected by the increased holiday spending, resulting in increased conversion of remittances to pesos.

“The long Christmas holiday weekend may still lead to accelerated holiday-related spending that could also lead to some seasonal increase in the conversion of remittances to pesos … in preparation for the long New Year holiday weekend,” Mr. Ricafort said.

Mr. Ricafort expects the peso to move between P54.90 and P55.40 for this week, while the trader gives a slightly higher forecast of P55 to P55.50 per dollar. — Aaron Michael C. Sy