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Peso bounces back due to mild US inflation report

Peso bounces back due to mild US inflation report

The struggling Philippine peso bounced back after the US reported milder-than-expected inflation data and as hopes were raised for progress on the US-China trade dispute.

Last Friday, the peso closed the week at P54.13 against the dollar, after hitting at P54.18 on Thursday. While the trading was a bit slow, the opening at P54.10 went higher and the low was P54.13.

The trading brought the volume to $776.1 million from $665 million the previous day.

According to a FOREX trader, the peso appreciated “after the release of unexpectedly softer (US) consumer inflation data…”

The Consumer prices in the US rose less than expected in September driven by slower growth in rents and falling energy prices even amid a robust labor market as mentioned by Reuters.

Another trader said that the inflation was the main factor while corporate demand for pesos also provided a boost that led to the closing of P54.13 per US$.

It is also interesting that China and US are both attending the G20 summit in Argentina, making the possibility of trade talks on the sidelines, weighing on the dollar and hopefully would not result to deadlock.

While this is a good development, the issue here that many observers expressed is for how long would the peso remain strong knowing that there are several factors that affect the peso devaluation.

Even Bangko Sentral ng Pilipinas and other financial analysts expect that the expected foreign remittances this Christmas season would not be enough to make the pesos strong.