Peso likely to weaken – BusinessWorld Online

The PESO could weaken against the dollar this week on expectations of a broader trade deficit and weaker gross domestic product (GDP) growth in the second quarter.

The local unit closed at 55.20 pesos per dollar on Friday, gaining 40 centavos from its close of 55.60 pesos on Thursday, based on data from the Bankers Association of the Philippines.

However, the peso weakened seven centavos from its close of P55.13 a week earlier.

The local currency opened Friday’s session at P55.48 against the dollar. Its weakest finish was P55.50, while its intraday best was P55.15 against the greenback.

Dollars exchanged rose to $1.22 billion on Friday from $986.6 million on Thursday.

The peso appreciated against the dollar after a sharp drop in global oil prices, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., said the gradual downward trend in oil prices could ease inflationary pressures.

Mr Asuncion said that for this week the market will take into account trade balance and GDP data to be released on Tuesday.

The peso could also be weighed down by expectations of a weaker second-quarter GDP growth report, he added.

A business world a poll of 18 analysts last week gave an average GDP growth estimate of 7.5% for the April-June period, down from 8.3% in the first quarter and 12.1% in the same period a year ago.

For this week, Mr. Asuncion gave a forecast range of Ps55.55-56.10 per dollar while Mr. Ricafort expects the local unit to trade in a stronger range of Ps54.80-55.30. — KB Ta-asan