Politics

Peso steady on PMI data, vaccination

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THE PESO closed unchanged versus the greenback on Monday as the market priced in steady manufacturing activity in February and the start of the government’s vaccination drive.

The local unit closed at P48.59 per dollar on Monday, unchanged from its Friday finish, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session at P48.60 per dollar. Its weakest showing was at P48.67 while its intraday best was at P48.54 against the greenback.

Dollars traded slumped to $678.45 million on Monday from the $1.325 billion logged on Friday.

The peso’s steady close came following the release of the latest February purchasing managers’ index data, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

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IHS Markit reported yesterday that the Philippines’ manufacturing PMI in February was at 52.5 for the second straight month, going beyond the 50-neutral mark and signifying growth.

The country’s reading was second best in the region next to Singapore (55.2) and was better than Vietnam (51.6) and Indonesia (50.9), Malaysia (47.7), Thailand (47.2), and coup-stricken Myanmar (27.7). It was also higher than the ASEAN average of 49.7.

A trader, meanwhile, attributed the peso’s flat finish to mixed market sentiment due to optimism over the start of vaccinations in the country and the stronger US personal consumption expenditure (PCE) inflation data released on Friday.

The Sinovac vaccines donated by the Chinese government arrived in the Philippines on Sunday and some healthcare workers were inoculated on Monday.

Meanwhile, US consumer spending increased by the most in seven months in January as the government doled out more pandemic relief money to low-income households and new COVID-19 infections dropped, positioning the economy for faster growth in the first quarter, Reuters reported.

Despite the strong rebound in consumer spending reported by the Commerce department on Friday, price pressures were muted. Inflation is being closely watched amid concerns from some quarters that US President Joseph R. Biden’s proposed $1.9-trillion COVID-19 recovery package could cause the economy to overheat.

Consumer spending, which accounts for more than two-thirds of US economic activity, jumped 2.4% last month. That was the biggest gain since last June and ended two-straight monthly declines. Personal income shot up 10%, the largest increase since last April when the government disbursed the first round of stimulus checks. Income rose 0.6% in December.

Inflation was benign last month. The PCE price index excluding the volatile food and energy component rose 0.3% after a similar gain in December. In the 12 months through January, the so-called core PCE price index increased 1.5% after advancing 1.4% in December.

The core PCE price index is the Fed’s preferred inflation measure for its 2% target, a flexible average.

For today, Mr. Ricafort gave a forecast range of P48.55 to P48.65 per dollar, while the trader sees the peso moving between the P48.50 to P48.70 band. — L.W.T. Noble with Reuters

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