THE PESO rose further against the dollar on Thursday as Philippine inflation likely eased last month.
The local unit closed at P55.50 per dollar on Thursday, strengthening by seven centavos from its P55.57 finish on Wednesday, based on Bankers Association of the Philippines data.
The peso opened Thursday’s session steady at P55.75 against the dollar. Its intraday best was at P55.465, while it dropped to as low as P55.78 versus the greenback during the session.
Dollars exchanged dropped to $1.72 billion on Thursday from $1.88 billion on Wednesday.
The peso gained against the dollar on market expectations that headline inflation eased further in December, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The Philippine Statistics Authority will release December consumer price index data on Friday.
A BusinessWorld poll conducted last week yielded a median estimate of 4% for December headline inflation, within the central bank’s 3.6-4.4% forecast and slower than 4.1% in November and 8.1% in December 2022.
If realized, December would be the first time that inflation was within the central bank’s 2-4% target and the slowest since the 3% print in February 2022.
This would bring the 2023 inflation average to 6%, matching the Bangko Sentral ng Pilipinas’ (BSP) baseline forecast.
The continued easing of inflation could prompt the BSP to cut rates within this year, Mr. Ricafort added.
BSP Governor Eli M. Remolona, Jr. said last month that the central bank will likely keep rates elevated until inflation is comfortably within its 2-4% goal.
The Monetary Board has raised borrowing costs by a cumulative 450 basis points (bps) from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%.
For Friday, Mr. Ricafort expects the peso to range from P56.40 to P55.60 per dollar. — AMCS