THE PESO appreciated against the dollar on Monday following weaker US data last week.
The local currency closed at P55.70 versus the dollar on Monday, inching up by seven centavos from Friday’s P55.77 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Monday’s session steady at P55.77 per dollar. Its weakest showing was at P55.81, while its intraday best was at P55.68 against the greenback.
Dollars traded dropped to $646.5 million on Monday from the $1.06 billion seen on Friday.
“The peso appreciated following the decline in US manufacturing and services PMI (purchasing managers’ index) data last week,” a trader said in an e-mail.
US business activity fell to a three-month low in June and the contraction in the manufacturing sector deepened, though the overall picture indicated economic growth ticked up a notch in the second quarter, Reuters reported.
The peso was also supported by the launch of the Bankers’ Association of the Philippines’ (BAP) dollar-peso cross-currency swap (USDPHP CCS) market, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The BAP said the swap market will help member banks manage foreign exchange and interest rate risks through hedging instruments.
“Thus, the cross-currency swaps market would be an alternative to the forex spot market and the non-deliverable forward market by using the currency available as collateral to the borrowers of the other currency, while also benefiting from the interest rate differentials,” Mr. Ricafort said.
For Tuesday, the trader said the peso could appreciate further against the dollar ahead of a likely weaker US durable goods report.
The trader sees the peso moving between P55.55 and P55.80 per dollar on Tuesday, while Mr. Ricafort expects it to trade from P55.60 to P55.80. — A.M.C. Sy with Reuters