Peso inches down vs dollar as AMRO cuts PHL GDP forecasts

Peso inches down vs dollar as AMRO cuts PHL GDP forecasts

THE PESO slipped against the dollar on Tuesday after the ASEAN+3 Macroeconomic Research Office (AMRO) reduced its gross domestic product (GDP) growth forecasts for the Philippines.

The local unit closed at P55.40 per dollar on Tuesday, weakening by two centavos from its P55.38 finish on Friday, Bankers Association of the Philippines data showed.

The peso opened Tuesday’s session lower at P55.435 against the dollar. Its intraday best was its closing level of P55.40, while its weakest showing was at P55.52 versus the greenback.

Dollars exchanged went up to $1.24 billion on Tuesday from $1.19 billion on Friday.

The peso declined against the dollar after AMRO lowered its growth estimates for the Philippines for this year and next, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

AMRO now expects the Philippine economy to expand by 5.6% this year, lower than the 5.9% forecast it gave in its Regional Economic Outlook Update in October.

The latest growth projection is below the government’s full-year 6-7% target and slower than the 7.6% GDP expansion in 2022.

The economy expanded by 5.9% in the third quarter, bringing the nine-month average to 5.5%. Economic growth would have to reach at least 7.2% in the fourth quarter to hit the lower end of the government’s target.

For 2024, AMRO slightly lowered its GDP growth forecast to 6.3% from the 6.5% it gave in October. This would likewise fall short of the government’s 6.5-8% target for next year.

“The peso weakened as global trade prospects brightened following the two-day extension of the truce between the Israeli and Hamas military forces,” a trader said in an e-mail.

An Israel-Hamas truce in the Gaza Strip stretched into a fifth day on Tuesday as the two sides completed the release of Israeli hostages and detained Palestinians and looked poised to free more as the pause in fighting was extended by two days, Reuters reported.

Israel said 11 Israelis had returned to the country from the Gaza Strip on Monday, bringing to 69 the total of Israeli and foreign hostages the Palestinian group has freed since Friday under the truce.

The peso was also dragged down by the general strength of the dollar against other global currencies, Mr. Ricafort added.

On Tuesday, the dollar index, a measure of the greenback against a basket of currencies, fell to 103.07, its lowest since Aug. 31, Reuters reported. The index is down 3% and on course for its steepest monthly decline in a year.

For Wednesday, the trader said the peso could strengthen against the dollar ahead of a likely softer US consumer confidence report.

The trader sees the peso moving between P55.25 and P55.50 per dollar on Wednesday, while Mr. Ricafort expects it to trade from P55.30 to P55.50. — AMCS with Reuters