THE PESO surged to a near three-month high on Tuesday as the dollar was weaker due to market worries over the US economy’s health, and before the release of February Philippine inflation data.
The local unit closed at P57.753 per dollar on Tuesday, strengthening by 14.7 centavos from its P57.90 finish on Monday, Bankers Association of the Philippines data showed.
This was the peso’s strongest finish in nearly three months or since its P57.735-per-dollar close on Dec. 6.
The peso opened Tuesday’s session stronger at P57.83 against the dollar. It climbed to as high as P57.75, while its intraday low was at P57.84 versus the greenback.
Dollars exchanged inched down to $1.04 billion on Tuesday from $1.06 billion on Monday.
“The dollar-peso closed lower on worries of a weakening US economy after the ISM (Institute for Supply Management) manufacturing index came in lower and amid rising trade tensions which could also weaken the US economy,” a trader said in a phone interview.
US manufacturing was steady in February, but a measure of prices at the factory gate jumped to nearly a three-year high and it took longer for materials to be delivered, suggesting that tariffs on imports could soon undercut production, Reuters reported.
Worries about duties on imports dominated commentary from manufacturers in the Institute for Supply Management survey on Monday, with most saying the tariffs being pushed by President Donald J. Trump against trading partners such as Canada, Mexico and China had created an uncertain operating environment.
The ISM’s manufacturing purchasing managers’ index (PMI) slipped to 50.3 last month from 50.9 in January, which marked the first expansion since October 2022 and likely reflected factories front-loading imports to beat tariffs. A PMI reading above 50 indicates growth in the manufacturing sector, which accounts for 10.3% of the economy.
Economists polled by Reuters had forecast the PMI would ease to 50.8. Production at factories nearly stalled after rebounding in the prior month. The dip in the PMI mirrored declines in other sentiment measures as the Trump administration pushes ahead with its plan to ratchet up tariffs on imported goods.
Domestic manufacturers rely heavily on imported raw materials. Analysts have warned of financial fallout for US automakers and other companies that manufacture vehicles in Mexico and Canada and sell them in the US. Other duties aimed at imported steel, aluminum and motor vehicles will either soon go into effect or are in fast-tracked development.
Manufacturing only just started recovering after a prolonged downturn triggered by the Federal Reserve’s aggressive monetary policy tightening in 2022 and 2023 to tame inflation. Concerns that tariffs will raise prices contributed to the US central bank’s decision to pause its interest rate cuts in January.
The dollar was weaker against a basket of currencies.
Meanwhile, the peso was also supported by the expected easing in February inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message. The Philippine Statistics Authority will release February consumer price index (CPI) data on March 5 (Wednesday).
A BusinessWorld poll of 18 analysts yielded a median estimate of 2.6% for the February CPI, within the central bank’s 2.2%-3% forecast for the month.
If realized, this would be slower than the 2.9% recorded in January and the 3.4% seen in the same month a year ago. This would also be the slowest in four months or since the 2.3% recorded in October.
For Wednesday, the trader expects the peso to move between P57.60 and P58 per dollar, while Mr. Ricafort sees it ranging from P57.65 and P57.85. — Aaron Michael C. Sy with Reuters