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Peso down vs dollar on bets for US Fed holding key rate

THE PESO depreciated against the dollar on Monday on expectations that the US Federal Reserve will hold its key rate at its meeting this week.

The local currency closed at P56.866 versus the dollar on Monday, weakening by 5.1 centavos from Friday’s P56.815 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Monday’s session at P56.80 per dollar. Its intraday best was at P56.74, while its weakest showing was at P56.875 against the greenback.

Dollars traded fell to $821.1 million on Monday from the $1.06 billion on Friday.

The peso weakened due to expectations that the Fed will keep its benchmark rate steady in its meeting this week, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso weakened further amid expectations of hawkish policy cues from the US Federal Reserve in their meeting this week,” a trader likewise said in an e-mail.

A Reuters poll of 97 economists conducted on Sept. 7-12 showed 95%, or 94 economists, predicted the US central bank would hold the federal funds rate at the current 5.25%-5.5% during its Sept. 19-20 meeting.

The Fed raised interest rates by 25 basis points (bps) last month, bringing its benchmark overnight rate to a range between 5.25% and 5.5%.

It has hiked rates by a cumulative 525 bps since it began its tightening cycle in March last year.

The peso was also dragged down by higher global crude oil prices on Monday, Mr. Ricafort added.

Reuters reported Brent crude futures rose 71 cents or 0.8% to $94.64 a barrel by 0622 GMT while US West Texas Intermediate crude futures were at $91.55 a barrel, up 78 cents or 0.9%.

Both benchmarks have climbed for three consecutive weeks to touch their highest levels since November and are on track for their biggest quarterly increase since Russia’s invasion of Ukraine in the first quarter of 2022.

For Tuesday, the trader said the peso could recover due to a potentially stronger euro zone inflation report.

The trader sees the peso moving between P56.70 and P56.90 per dollar on Tuesday, while Mr. Ricafort expects it to range from P56.75 to P56.95. — Aaron Michael C. Sy

#Peso #dollar #bets #Fed #holding #key #rate

Peso weakens anew vs dollar ahead of US inflation report

THE PESO depreciated against the dollar anew on Wednesday on expectations of a pickup in US consumer inflation last month.

The local currency closed at P56.72 versus the dollar on Wednesday, weakening by seven centavos from Tuesday’s P56.65 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Wednesday’s session at P56.68 per dollar. Its intraday best was at P56.60, while its weakest showing was at P57.73 against the greenback.

Dollars traded went down to $1.02 billion on Wednesday from the $1.11 billion on Tuesday.

The peso was dragged down by expectations of faster US inflation in August, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso depreciated anew amid potentially higher US consumer inflation reports due to be released tonight,” a trader likewise said in an e-mail.

US consumer prices likely increased by the most in 14 months in August amid a surge in the cost of gasoline, but an expected moderate rise in underlying inflation could encourage the Federal Reserve to keep interest rates on hold next Wednesday, Reuters reported.

The consumer price index (CPI) likely increased by 0.6% last month, according to a Reuters survey of economists. That would be the largest gain since June 2022 and would follow two straight monthly advances of 0.2%.

Mr. Ricafort added that a stronger dollar and higher global crude oil prices on Wednesday caused the peso to decline.

The dollar index, which tracks the currency against six peers, held firm, though moves were subdued, up 0.1% to 104.70, as traders awaited the US CPI reading for August.

The dollar index has surged 5% since late July and stands at its highest level in around half a year.

Meanwhile, oil prices jumped about 2% to a near 10-month high on Tuesday on a tighter supply outlook and optimism over the resilience of energy demand in major economies.

Brent futures rose by $1.42 or 1.6% to settle at $92.06 a barrel, while US West Texas Intermediate crude rose by $1.55 or 1.8% to settle at $88.84. Both benchmarks closed at their highest levels since November 2022.

For Thursday, the trader said the peso could weaken further following the US CPI report and ahead of the release of US producer price index data.

The trader sees the peso moving between P56.60 and P56.85 a dollar on Thursday, while Mr. Ricafort expects it to range from P56.60 to P56.80. — AMCS with Reuters

#Peso #weakens #anew #dollar #ahead #inflation #report

Peso inches lower vs dollar

THE PESO inched down against the dollar on Monday as investors were cautious ahead of the release of August US consumer price index (CPI) data this week.

The local currency closed at P56.69 versus the dollar on Monday, weakening by six centavos from Friday’s P56.63 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Monday’s session flat at P56.63 per dollar. Its intraday best was at P56.53, while its weakest showing was at P56.695 against the greenback.

Dollars traded went down to $1.19 billion on Monday from the $1.62 billion on Friday.

“The peso weakened amid market caution prior to the release of the US consumer inflation report for August 2023,” a trader said in an e-mail.

August US CPI data will be released on Wednesday.

The peso inched down due to signals from the Bangko Sentral ng Pilipinas (BSP) that inflation could return to its 2-4% target in the first quarter next year instead of this year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

BSP Governor Eli M. Remolona, Jr. last week said he expects inflation to be back within its target range early next year amid lingering price risks.

He added that the BSP could upwardly revise its full-year inflation forecast of 5.6% for 2023 at their Sept. 21 policy meeting.

For Tuesday, the trader said the peso could depreciate further ahead of key US data releases.

The trader sees the peso moving between P56.60 and P56.85 per dollar on Tuesday, while Mr. Ricafort sees it ranging from P56.60 to P56.80. — AMCS

#Peso #inches #dollar

Gov’t may launch dollar RTB offer this month

Gov’t may launch dollar RTB offer this month

THE GOVERNMENT may push through with the launch of its US dollar retail Treasury bond (RTB) offer this month, National Treasurer Rosalia V. de Leon said.

“We’re monitoring the markets right now. We’re conducting financial literacy (seminars), including in Doha and Dubai. So, we’re looking at the interest of overseas Filipino workers (OFWs),” Ms. De Leon said in a press chat on Friday.

“So maybe at the end of the month, we’re looking. We will see, we’re not officially saying we are going to launch,” she added.

Earlier in July, Ms. De Leon said that they were planning to launch the retail dollar bond offering by September.

The government then said it was targeting an offer size of $2 billion.

The Philippines’ last retail dollar bond sale was in 2021, when it raised almost $1.6 billion.

In January, the government also raised $3 billion from its second global bond offering under the Marcos administration.

Ms. De Leon earlier said that the retail dollar bonds can be marketed through platforms such as the Bonds.PH app, the Land Bank of the Philippines mobile app and selling agents. The government is also working on coordinating with banks to waive the fees for opening dollar accounts.

This year, the government plans to borrow P2.207 trillion, of which 75% will be sourced locally. Broken down, P1.654 trillion will be sourced domestically and P553.5 billion will come from overseas.

As of end-July, the National Government’s (NG) outstanding debt stood at P14.24 trillion.

External debt rose by 9.3% to P4.43 trillion at the end of July, which consisted of P2.42 trillion in global bonds and P2.02 trillion in loans.

UNUSED LOAN PROCEEDS
Meanwhile, Finance Secretary Benjamin E. Diokno said that the Philippines is returning unused loan proceeds worth $320 million to the World Bank.

Last week, the World Bank held a high-level meeting with the heads of the departments of Finance and Health, as well as the National Economic and Development Authority.

“The $320 million was excess from the pandemic. The World Bank advised us to return that and come up with a new program,” Mr. Diokno said in mixed English and Filipino.

The loan proceeds were supposed to be used to purchase coronavirus disease 2019 (COVID-19) vaccines. However, Mr. Diokno said the funds were not utilized as the country is already recovering from the pandemic and there were enough donations of the COVID-19 vaccines.

Mr. Diokno said that the government is working on another health-related loan program focusing on “strengthening local health (and) preparing for the next pandemic.”

From 2020 until July 2023, the World Bank has provided over $7 billion for COVID-19 programs for the Philippines. — Luisa Maria Jacinta C. Jocson

#Govt #launch #dollar #RTB #offer #month

Dollar reserves slip to $99.8B as of end-Aug.

Dollar reserves slip to $99.8B as of end-Aug.

THE PHILIPPINES’ dollar reserves dipped as of end-August, as the National Government (NG) paid some of its foreign debt obligations and the value of the central bank’s gold holdings fell.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed gross international reserves (GIR) slipped by 0.14% to $99.81 billion as of end-August from $99.95 billion as of end-July.

This was the lowest dollar reserve level since the $99.39 billion seen in June.

However, the GIR was 2.4% higher than $97.44 billion as of end-August 2022.

“The month-on-month decrease in the GIR level reflected mainly the NG’s payments of its foreign currency debt obligations and the downward adjustments in the value of BSP’s gold holdings due to the decrease in the price of gold in the international market,” the central bank said. 

As of end-August, the dollar reserves were enough to cover 5.9 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.

It is also equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.

Ample foreign exchange buffers protect the country from market volatility and serve as a guarantee for the economy’s ability to pay its debts in the event of an economic downturn.

“The slight decrease in the GIR in August 2023 was due to a number of factors, including the payment of maturing foreign currency obligations, some ‘hot money’ outflows, and the decline in the value of the Philippine peso against the US dollar, among others,” Security Bank Corp. Chief Economist Robert Dan J. Roces said.   

Based on BSP data, foreign currency deposits fell by 52.5% to $648 million at end-August from $1.367 billion a month earlier and by 63.5% from $1.777 billion a year ago.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the decrease in foreign currency holdings “partly due to some foreign exchange operations (possible foreign exchange intervention activities, as an option signaled by local monetary authorities during the month).”

The peso closed at P56.595 on Aug. 31, depreciating by 3% or P1.715 from the P54.88 finish on July 31.

Meanwhile, buffers in the form of gold were valued at $10.23 billion as of end-August, slipping by 0.7% from $10.3 billion as of end-July. However, it was up by 19.9% from $8.53 billion a year earlier.

The decline in foreign currency deposits and gold buffers were offset by an increase in foreign investments, Mr. Ricafort said.

The BSP’s foreign investments rose by 0.7% to $84.33 billion as of end-August from $83.68 billion a month earlier. This was also 1.9% higher than $82.73 billion a year earlier.

According to the BSP, net international reserves slipped by 0.1% to $99.8 billion as of end-August from $99.9 billion from end-July.

Net international reserves are the difference between the BSP’s reserve assets (GIR) and reserve liabilities such as short-term foreign debt, and credit and loans from the International Monetary Fund (IMF).

The Philippines’ reserve position in the IMF also declined by 1.4% to $790.4 million from $801.9 million in July but rose by 6.7% from $740.8 million as of end-August 2022.

Special drawing rights (SDRs) — the amount the country can tap from the IMF — inched up by 0.5% to $3.81 billion as of end-August from $3.79 billion in the month prior. This was 4% higher than $3.66 billion a year earlier.

China Banking Corp. Chief Economist Domini S. Velasquez said the country’s GIR as of end-August remains sufficient in terms of its imports and external debt cover.

“We think there is a risk that the GIR will fall in September due to the depreciation pressure on the peso. Moreover, we will likely see higher imports as oil prices continue to climb. This will squeeze the import cover ratio of the GIR,” she said.

The local currency closed at P56.79 versus the dollar on Thursday, strengthening by 15 centavos from its previous finish of P56.94, data from the Bankers Association of the Philippines’ website showed.

Year to date, the peso depreciated by 1.8% or P1.035 from its P55.755 finish on Dec. 29, 2022.

Meanwhile, Mr. Roces said the slight decrease in August GIR is not a “cause for alarm.”

“The outlook for the country’s dollar reserves in the coming months is positive with remittances from BPOs (business process outsourcing) and OFWs (overseas Filipino workers) incoming,” Mr. Roces said.

The BSP is expecting to end the year with $100 billion in dollar reserves and $102 billion by end-2024. — Keisha B. Ta-asan

#Dollar #reserves #slip #99.8B #endAug

Peso sinks to near 9-month low as US dollar maintains strength

THE PESO depreciated to a near nine-month low on Wednesday as the dollar gained ground amid rising US bond yields and global oil prices.

The local currency closed at P56.94 versus the dollar on Wednesday, declining by 14 centavos from Tuesday’s P56.80 finish, data from the Bankers Association of the Philippines’ website showed.

This was the peso’s worst finish since it closed at P57.375 per dollar on Nov. 22, 2022.

The local unit opened Wednesday’s session weaker from Tuesday’s close at P56.90 per dollar. Its intraday best was at P56.80, while its worst showing was at P56.99 against the greenback.

Dollars traded went down to $1.36 billion on Wednesday from the $1.52 billion on Tuesday.

The peso declined amid broad dollar strength after US bond yields and oil prices rose on Wednesday, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message.

“The peso weakened as global crude oil prices continued to rally after Saudi Arabia and Russia maintained supply restrictions,” a trader said in an e-mail.

The dollar held close to a six-month peak as jitters over China and global growth weighed on risk appetite, while the yen strengthened as Japan’s top currency diplomat sent a warning about the currency after it earlier dropped to a 10-month low, Reuters reported.

The yen strengthened by as much as 0.4% to 147.02 per US dollar after Japan’s top currency diplomat, Masato Kanda, said they won’t rule out options if speculative moves persist, the strongest warning since mid-August.

By 0813 GMT, it stood at 147.47 per dollar, compared with 147.82 earlier in the session, which was its lowest since Nov. 4.

The Asian currency has hovered around the key 145-per-dollar level for the past few weeks, leading traders to keep a wary eye on signs of intervention by Tokyo.

Against a basket of currencies, the dollar was at 104.77, not far off the six-month high of 104.90 touched on Tuesday. Economic data from China and Europe on Tuesday fanned some fears of slowing global growth, pushing investors to scramble for the greenback.

The yield on the benchmark US 10-year Treasury note rose nine basis points to 4.26% after reaching 4.268%, its highest since Aug. 25.

Meanwhile, oil prices surged more than 1% in the previous session, as markets worried about a supply shortage after Saudi Arabia and Russia extended their voluntary supply cuts to the end of the year.

“This development could mean inflation stays higher for longer which could mean central banks have less room to maneuver,” Mr. Mapa said.

For Thursday, the peso could trade depending on the dollar’s movement, he said.

Meanwhile, the trader said the peso could strengthen as the dollar might weaken on potentially strong European gross domestic product data.

The trader sees the peso moving between P56.80 and P57 per dollar on Thursday. — AMCS with Reuters

#Peso #sinks #9month #dollar #maintains #strength

Peso weakens against dollar as market awaits August inflation report

THE PESO inched down against the dollar on Monday as the market awaited the release of the August consumer price index report on Tuesday.

The local currency closed at P56.62 versus the dollar on Monday, weakening by 2.50 centavos from Thursday’s P56.595 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Monday’s session weaker at P56.65 per dollar. Its intraday best was at P56.49, while its worst showing was at P56.66 against the greenback.

Dollars traded went up to $1.59 billion on Monday from the $1.48 billion on Thursday.

The peso weakened ahead of the release of August inflation data, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“[On Tuesday], we’ll get domestic inflation, which could hint at the BSP’s (Bangko Sentral ng Pilipinas) own policy path,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message.

A BusinessWorld poll of 18 analysts yielded a median estimate of 4.9% for August inflation, near the lower end of the central bank’s 4.8-5.6% forecast for the month.

If realized, this would be faster than the 4.7% in July, but lower than the 6.3% print in August 2022.

It would also mark the 17th straight month that inflation exceeded the central bank’s 2-4% target.

The BSP last month kept benchmark interest rates steady for a third straight meeting, but signaled it is prepared to resume tightening if needed amid risks to inflation.

The Monetary Board left its overnight reverse repurchase rate unchanged at a near 16-year high of 6.25%. Interest rates on the overnight deposit and lending facilities were maintained at 5.75% and 6.75%, respectively.

The BSP has raised borrowing costs by 425 basis points (bps) from May 2022 to March 2023 to help bring down elevated inflation.

The Monetary Board will hold its next policy meeting on Sept. 21.

“We did note some inflows, possibly from remittances, over the long weekend helping offset anxiety over the outlook for the Fed policy stance,” Mr. Mapa added.

The US Federal Reserve raised interest rates by 25 bps in July, bringing its benchmark overnight rate to a range between 5.25% and 5.5%.

It has hiked rates by a cumulative 525 bps since it began its tightening cycle in March last year.

The Federal Open Market Committee will next meet on Sept. 19-20 to review policy.

The market expects the Fed to keep rates steady and possibly end its tightening cycle this month following soft economic data.

For Tuesday, Mr. Ricafort sees the peso trading from P56.50 to P56.70 against the dollar. — AMCS

#Peso #weakens #dollar #market #awaits #August #inflation #report