Philippine peso edges up as markets await U.S. inflation data
Cautious trading keeps the Philippine peso in a tight range at the start of the week as investors watch for fresh U.S. inflation readings. The move also reflects expectations that the Bangko Sentral ng Pilipinas could deliver another policy rate increase at its Oct. 22 meeting.
Highlights
- The peso appreciates by 4.1 centavos to close at P62.76 per dollar on Monday, with trading volume falling to $1.056 billion from $1.393 billion.
- Markets remain cautious as traders await U.S. inflation data that could influence the Federal Reserve's policy decision this month, with possible signs of central bank intervention.
- September inflation climbs to 7.2%, marking a seven-month streak above the 3% target and fueling expectations the BSP will implement a fourth consecutive rate hike on Oct. 22.
Currency trading and policy signals
As reported by BusinessWorld Online, the peso rises by 4.1 centavos to close at P62.76 per dollar on Monday, from P62.801 on Friday, based on data from the Bankers Association of the Philippines.The local currency opens the session stronger at P62.65 per dollar, which is also its intraday high, before weakening to as low as P62.80. Dollar volume declines to $1.056 billion from $1.393 billion.
Traders say the peso stays within a narrow range ahead of U.S. consumer and producer inflation data due later this week, with the figures seen as important for the Federal Reserve’s policy decision this month. Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort says there are also signs of possible intervention in the market to smooth volatility.
A second trader says the peso gains support from growing expectations that the BSP might deliver a policy rate hike next week.
Inflation outlook and market impact
The BSP’s Monetary Board is set to review its policy stance on Oct. 22, and the market widely expects a fourth straight rate increase. That expectation follows September inflation accelerating to 7.2%, an over three-year high, from 6.1% in August and 1.7% a year earlier.The latest reading marks the seventh straight month that inflation remains above the central bank’s 3% target, reinforcing the case for further monetary tightening. For Tuesday, the first trader expects the peso to move between P62.60 and P62.90 per dollar, while Ricafort and the second trader see a P62.60 to P62.85 range.
India’s September inflation jump and its implications for the Reserve Bank of India’s next moves were covered in our earlier article, noting that the headline reading rose above expectations and kept the policy bias tilted toward further tightening. We also highlighted how elevated energy prices and weather-driven food risks can sustain price pressures, reinforcing the case for another rate hike rather than near-term cuts.
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