Peso may move sideways amid data releases

THE PESO may move sideways against the dollar this week, with the market to monitor data at home and in the United States for leads.

The local unit closed at P55.64 per dollar on Friday, strengthening by 11 centavos from its P55.75 finish on Thursday, Bankers Association of the Philippines data showed.

Week on week, the peso strengthened by 11.5 centavos from its P55.755 close on Dec. 29.

The peso opened Friday’s session weaker at P55.85 per dollar. It dropped to as low as P55.89, while its intraday best was at P55.57 against the greenback.

Dollars exchanged inched down to $1.052 billion on Friday from the $1.061 billion recorded on Thursday.

The peso strengthened on Friday after China announced they will be relaxing property borrowing restrictions, which was “positive for the market,” a trader said.

China announced on Friday that they will be dialing back the policy that restricts the amount new borrowing property developers could raise each year.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the local currency strengthened after strong employment and manufacturing data released last week.

The Philippines’ unemployment rate dropped to its lowest level in over 17 years in November, as firms hired more workers ahead of the holiday season.

Preliminary data from the Philippine Statistics Authority’s (PSA) Labor Force Survey released on Friday showed the unemployment rate further eased to 4.2% in November. This was lower than the 4.5% in October and 6.5% a year earlier.

This translated to 2.177 million unemployed Filipinos in November, lower than the 2.241 million in October and the 3.160 million in the same month in 2021.

Meanwhile, factory output grew for the fifth consecutive month in November as productivity in the manufacturing sector increased, separate data from the PSA showed.

Results of the PSA’s Monthly Integrated Survey of Selected Industries reported that factory output, as measured by the volume of production index, expanded 5.9% year on year in November. This was faster than the previous month’s revised 5.3% but slower than the 28.6% growth in November 2021.

November marked the fastest growth in five months after the revised 0.02% dip recorded in June.

Mr. Ricafort added that the decline in global crude oil prices also supported the peso as it could “help ease inflationary pressures.”

For this week, Mr. Ricafort said that the market will look at December trade data to be released on Jan. 10 for leads.

Meanwhile, the trader said latest US jobs data released on Friday could affect peso-dollar trading to start the week.

The US’ unemployment rate was back to a pre-pandemic low of 3.5% as the labor market remains tight.

Nonfarm payrolls increased by 223,000 jobs last month after climbing 256,000 in November. The US added 4.5 million jobs in 2022, with employment gains averaging 375,000 per month.

Average hourly earnings rose 0.3% after gaining 0.4% in the prior month, with the year-on-year increase in wages at 4.6%.

For this week, Mr. Ricafort expects the local unit to move from P55.40 to P55.90 per dollar, while the trader gave a wider forecast range of P55 to P56. — A.M.C. Sy