Peso surges on GIR data, hopes of slower Fed hikes

THE PESO surged against the dollar on Monday on bets of slower rate hikes from the US Federal Reserve and as the Philippines’ gross international reserves (GIR) rose at end-2022.

The local currency closed at P55.11 versus the greenback, up by 53 centavos from Friday’s finish of P55.64, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s trading session stronger at P55.30 per dollar. Its weakest showing was at P55.32, while its intraday best was at P55.09.

Dollars traded rose to $1.22 billion from $1.052 billion on Friday.

“The peso appreciated significantly after the latest US labor reports showed softer wage inflation, which hinted at a potential easing in price pressures,” a trader said in an e-mail.

“The local currency might appreciate further amid prospects of a softer US policy rate hike in the upcoming Fed meeting,” the trader added.

Nonfarm payrolls increased by 223,000 jobs last month after rising 256,000 in November. However, average hourly earnings rose 4.6% in December from a year earlier, down from 4.8% in November.

Fed officials on Friday acknowledged cooling wage growth and other signs of a gradually slowing economy, with Atlanta President Raphael Bostic hinting at the chance of a quarter-percentage-point hike at the next policy meeting on Jan. 31 to Feb. 1.

The US central bank last year raised borrowing costs by 425 basis points to a 4.25%-4.5% range.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso strengthened against the dollar as central bank data released on Friday showed the country’s GIR climbed to $96.01 billion as of December 2022 from $95.12 billion in November.

This was above than the Bangko Sentral ng Pilipinas’ year-end projection of $93 billion.

It was also the highest since the $97.44 billion recorded as of August 2022.

For Tuesday, Mr. Ricafort expects the peso to move from P55 to P55.20 against the dollar, while a trader gave a stronger forecast range of P54.95 to P55.20. — AMCS