Peso closes unchanged vs greenback

THE PESO was steady versus the greenback on Wednesday as the September inflation print remained in line with market expectations.

The local unit closed at P58.65 per dollar on Wednesday, unchanged from its Tuesday finish, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session stronger at P58.60 versus the dollar. Its weakest showing was at P58.78, while its intraday best was at P58.39 against the greenback.

Dollars exchanged went up to $861.15 million on Wednesday from $779.1 million on Tuesday.

“The US dollar/peso exchange rate was unchanged today … after the latest inflation [print] was at new four-year high of 6.9%, in line with market expectations, but could support the possibility of further local policy rate hikes that help support or stabilize the peso and overall inflation,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

MUFG Bank Currency Analyst Sophia Ng said in a report that the higher headline inflation rate for September would reinforce market expectations of further policy tightening by the Bangko Sentral ng Pilipinas (BSP) and may support the peso against the dollar.

“A high inflation rate is within our core scenario and justifies the need for more aggressive tightening by the BSP on top of the need to curb import-led inflationary pressures due to the sharp drop in the peso so far this year,” Ms. Ng said.

She added that they expect another 50-basis-point (bp) hike from the BSP in its Nov. 17 meeting and a more moderate 25-bp increase in the Dec. 15 review.

Headline inflation rose to its fastest pace in more than 13 years in September due to higher food costs, the Philippine Statistics Authority reported on Wednesday.

The consumer price index stood at 6.9% in September, preliminary data showed, picking up from 6.3% in August and 4.2% in the same month last year. This was the fastest monthly figure since the 7.2% logged in February 2009.

The result fell within the 6.6-7.4% forecast given by the BSP for September and marked the sixth straight month that inflation breached the central bank’s 2-4% target for the year.

For the first nine months, headline inflation averaged 5.1%, faster than the 4% seen in the comparable year-ago period but below the BSP’s 5.6% forecast for 2022.

The BSP’s policy-setting Monetary Board raised rates by 50 bps for a second straight meeting on Sept. 22, bringing cumulative hikes since May to 225 bps.

Mr. Ricafort added that the BSP’s move to discourage peso speculation as well as the downward correction of the dollar against major global currencies also supported the local unit.

For Thursday, Mr. Ricafort gave a forecast range of P58.50 to P58.70. — K.B. Ta-asan

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