Peso Strengthens to P57:$1 Level Amid Dollar Weakness

The Philippine peso appreciated against the US dollar for the fourth consecutive trading day on Monday, marking its best performance in over two months. The peso closed at P57.9:$1, gaining 18 centavos from last Friday’s P58.08:$1. This level was last seen on May 20, and the peso’s best showing since it closed at P57.62:$1 on May 17.

Factors Behind the Peso’s Strength

The appreciation of the peso came as the US dollar weakened against major global currencies, influenced by the strengthening of the Japanese yen to over seven-month highs. The reversal of yen carry trades, where international investors borrowed in yen to finance investments in global stock markets, caused market unwinding and losses, contributing to the strengthening of other currencies, including the peso.

Rizal Commercial Banking Corp. chief economist Michael Ricafort explained that the market unwinding of yen-financed carry trades led to the appreciation of currencies across Southeast Asia and the broader Asian region.

Impact of Global Economic Data

The dollar’s weakening also coincided with profit-taking in American tech shares over the past three weeks, soft employment data in the US, and other economic indicators suggesting a potential risk of recession. The US reported the creation of only 114,000 non-farm jobs in July, the weakest in over three years and below market expectations.

Upcoming Economic Data

The market is now looking ahead to key local economic data releases this week, including July inflation data on Tuesday, August 6, June labor data on Wednesday, August 7, and second-quarter economic growth figures on Thursday, August 8. The Bangko Sentral ng Pilipinas (BSP) has indicated that inflation is expected to have accelerated, potentially reaching eight-month highs in July due to higher electricity rates and food prices.