THE peso is expected to strengthen further against the greenback this week after US non-farm payrolls data in January showed 151,000 jobs were created, lower than the 190,000 expected for the month.
Nicholas Antonio Mapa, research officer of the Ayala-controlled Bank of the Philippine Islands, said a lower-than-expected employment data in January would weaken the greenback against other currencies, including the peso.
“We’ll see if the dollar continues to lose ground with non-farm payroll data out later tonight. If it’s weaker than 190,000, then we may see the peso continue to appreciate,” Mapa said in an e-mail to the Standard, prior to the release of the jobs data Friday night (Manila time).
The peso on Friday closed at 47.66, P0.11 stronger than 47.775 on Thursday. Mapa said the dollar had been weakening due to disappointing latest economic data.
“… [This] may convince the Fed to delay its interest rates hike cycle,” Mapa said, adding the stronger Philippine Stock Exchange index was also helping the peso as foreign players returned to the Philippines.
Reports prior to the release of the January jobs data said the US economy was expected to have added 190,000 new jobs compared with the 292,000 created in December. Analysts said if the data missed expectations, the dollar would be expected to weaken against other currencies.
The peso posted a fresh six-year low against the dollar on Jan. 26, 2016, when it closed at 47.995. It was the lowest level since the 48.05 recorded on Sept. 16, 2009 at the height of the global financial crisis.
Economists from First Metro Investment Corp. and University of Asia and the Pacific projected that the peso might trade between 48 and 49 versus the greenback this year, taking into consideration the volatility in the global financial markets.
However, Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said the bank regulator was sticking to its earlier projection of a 43 to 46 trading average versus the dollar this year.
Mapa earlier said the US Federal Reserve’s plan of increasing interest rates again this year was threatening the stability of the peso against the greenback.
The peso’s weakest level in 2015 was recorded on Dec. 17, when it closed at 47.395, a day before the US Federal Reserve decided to increase interest rates. The peso breached the 47-a-dollar level on Nov. 9, closing at 47.16 from 46.935 a day earlier.
Bangko Sentral ruled out the possibility of a peso devaluation, saying the country’s macroeconomic fundamentals remained strong.
Bangko Sentral officials said the Philippines from a macroeconomic standpoint had resilient domestic factors, including consumption, private capital formation and public spending.