Peso strengthens back to P57:$1 level

The Philippine peso appreciated against the US dollar for the fourth consecutive trading day on Monday to mark its best showing in over two months, as the greenback was weighed down by the strengthening of the Japanese yen.

The local currency gained 18 centavos to close at P57.9:$1 from last Friday’s finish of P58.08:$1. This is the same close seen on May 20, and the best performance since May 17 when the peso closed at P57.62:$1.

Monday’s appreciation came after the dollar weakened against major global currencies amid the reversal of the yen carry trades as the Japanese currency appreciated to over seven-month highs.

“(This caused) some market unwinding of the carry trades financed by the yen such as on some global stock markets, whose appreciation is causing losses to international investors that borrowed in yen,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said in a commentary.

Ricafort said this then led to the appreciation of other currencies in Southeast Asia and in Asia in general, including the peso.

The dollar weakening also came amid the profit taking in American tech shares in the past three weeks, the soft employment data in the US, and other economic releases that could indicate a risk of recession.

This comes as the US reported the creation of 114,000 non-farm jobs in July, among the weakest in over three years or since the COVID-19 pandemic unemployment rate, and softer than market expectations.

Moving forward, the market awaits the release of local economic data this week such as the July inflation data on Tuesday, August 6, June labor data on Wednesday, August 7, and the second-quarter economic growth on Thursday, August 8.

The Bangko Sentral ng Pilipinas (BSP) said inflation is expected to have accelerated and could have possibly breached the government’s target to eight-month highs in July, due to higher electricity rates and food prices. — RSJ, GMA Integrated News