THE PESO strengthened slightly on Thursday due to the narrowing of the government’s budget deficit for November.
The local currency closed at P55.09 against the greenback, up by a centavo from Wednesday’s P55.10 close, data from the Bankers Association of the Philippines showed.
The peso opened the session at P55.045 per dollar, which is also its intraday best. Its weakest showing was at P55.18. Dollars traded fell to $774.2 million from $833.7 million on Wednesday.
In a Viber message, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso inched up mainly because of the recent data release from the Department of Finance on the country’s budget deficit.
Data sent by Finance Secretary Benjamin E. Diokno to reporters on Wednesday showed that the fiscal gap in November shrank by 3.7% year on year to P123.9 billion from P128.7 billion.
Year to date, the budget deficit shrank by 7.2% to P1.24 trillion, from the P1.33-trillion gap in the same period last year.
Mr. Diokno said this was 75% of the revised P1.7-trillion full-year deficit program.
The data also showed that the narrowing of the deficit was due to revenue growth outpacing state spending.
Revenue collections for November jumped by 16.57% year on year to P331.1 billion from P284.4 billion.
Meanwhile, tax revenues increased by 15.92% year on year to P312.9 billion. The Bureau of Internal Revenue collected P237.1 billion, up by 12.53% year on year, while the Bureau of Customs saw its collections rise by 30.74% to P75.7 billion. There were no revenues reported from other tax offices.
Additionally, nontax revenues went up by 28.96% to P18.2 billion in November. The Bureau of the Treasury reported a 13.25% drop in revenues to P5.3 billion. Other offices saw a 61.04% increase in revenues to P12.9 billion.
However, data also showed that state spending rose by 10.24% to P455 billion from P412.7 billion a year ago.
Mr. Ricafort said that the peso gained on the upward correction of the US stock market.
According to a report by Reuters, the US market’s three main stock indexes closed higher on Wednesday for their biggest daily gains so far in December with help from upbeat Nike and FedEx quarterly earnings, as well as improving consumer confidence and easing inflation expectations from investors.
The Dow Jones Industrial Average rose 526.74 points or 1.6% to 33,376.48; the S&P 500 gained 56.82 points or 1.49% to 3,878.44; and the Nasdaq Composite added 162.26 points or 1.54% to 10,709.37.
Meanwhile, a trader said in an e-mail that the peso strengthened due to the continued increase in foreign exchange inflows.
“The peso strengthened anew amid increased peso demand due to expected year-end foreign remittances,” the trader said.
The trader also noted that Friday’s movement could be affected by the release of key US economic data.
“The local currency might appreciate tomorrow (Friday) ahead of potentially weaker US personal consumption expenditure inflation which serves as the Fed’s main inflation gauge,” the trader said.
Mr. Ricafort sees the peso moving between P55.00 to P55.20 while the trader gave a slightly wider forecast range of P54.95 to P55.20. — Aaron Michael C. Sy