THE PESO slumped against the dollar on Monday following the release of stronger-than-expected US labor data.
The local currency closed at P54.39 versus the greenback on Monday, declining by 71 centavos from Friday’s P53.68 finish, data from the Bankers Association of the Philippines showed.
The peso opened Monday’s trading session at P54.15 per dollar. Its weakest showing was at P54.47, while its intraday best was at P54.12 against the greenback.
Dollars traded went down to $1.053 billion from $1.165 billion on Friday.
“The peso depreciated following the stronger-than-expected US employment reports for January 2023 released last Friday,” a trader said in an e-mail.
The peso weakened “after the healthy upward correction of the dollar versus major global currencies to new three-week highs” amid the strong jobs data, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The survey of establishments showed nonfarm payrolls surged by 517,000 jobs last month, the most in six months. Economists in a Reuters poll had expected a gain of 185,000. Data for December was revised higher to show 260,000 jobs added instead of the previously reported 223,000. Employment growth last month was well above the monthly average of 401,000 in 2022.
The US unemployment rate also hit a 53-and-a-half-year low of 3.4%, slower than December’s 3.5%.
However, average hourly earnings only increased by 0.3% last month, compared to 0.4% in December.
This lowered the year-on-year increase in wages to 4.4% from 4.8% in December, the smallest rise since August 2021.
The dollar held firm on Monday after the strong US jobs report suggested the US Federal Reserve could stay hawkish for longer.
Against a basket of currencies, the US currency touched a nearly four-week high of 103.22 and was last at 103.03. The index had gained 1.1% on Friday.
Mr. Ricafort said the peso also weakened due to geopolitical concerns as the US military shot down an alleged Chinese spy balloon over the weekend, fueling renewed tensions between Washington and Beijing.
For Tuesday, the trader said the peso could rebound against the dollar on expectations of slower Philippine headline inflation in January.
Both the trader and Mr. Ricafort see the peso moving from P54.25 to P54.50 against the greenback on Tuesday. — A.M.C. Sy with Reuters