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Philippines: Peso retracts to 53:$1 level
MANILA, Philippines — The peso rally lost steam yesterday after momentarily breaking the 52 to $1 resistance level as inflation quickened for the seventh straight month to hit a fresh five-year high of 5.7 percent in July from 5.6 percent in June.
The local currency lost 15 centavos to close at 53 to $1 from Monday’s 52.85 to $1. It opened at an intraday high of 52.85 and lost steam to hit an intraday low of 53.015.
Trading volume thinned to $681.5 million yesterday from $892.9 million last Monday.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said July inflation was consistent with the central bank’s still elevated inflation outlook for 2018.
Espenilla said the consumer price index is expected to peak in the third quarter before easing in the fourth quarter.
“The uptick in prices in 2018 is driven mainly by supply-side factors including the impact of the higher excise taxes. The BSP continues to assess the public’s inflation expectations along with evidence of possible second-round effects. The BSP stands ready to take a strong follow-through monetary policy action to help ensure that 2019 inflation target is achieved,” Espenilla said.
Inflation averaged 4.5 percent in the first seven months, exceeding the BSP’s two to four percent target.
A trader said investors are awaiting the outcome of the rate-setting meeting of the BSP’s Monetary Board tomorrow.
The trader pointed out the market has priced in a 25 basis point rate hike but expects a stronger action involving as much as an increase of 50 basis points in benchmark rates.
The BSP’s Monetary Board has so far raised benchmark rates by 50 basis points this year through back-to-back rate hikes to curb rising inflationary pressures. It lifted interest rates by 25 basis points for the first time in more than three years on May 10 followed by another 25 basis points last June 20.
Source: https://www.philstar.com/business/2018/08/08/1840540/peso-retracts-531-level#RVL9BEYeKFMJe1AC.99