Peso drops vs dollar on GDP, trade reports

THE PESO weakened versus the greenback on Tuesday after the country recorded a slower economic growth in the second quarter and a wider trade deficit in June. 

The local unit closed at P55.595 per dollar on Tuesday, inching down by 4.5 centavos from its P55.55 finish on Monday, based on data from the Bankers Association of the Philippines.

The peso opened Tuesday’s session at P55.45 per dollar. Its weakest showing was at P55.66, while its intraday best was at P55.40 versus the greenback.

Dollars exchanged went up to $1.36 billion on Tuesday from $886.9 million on Monday.

“The peso weakened after the weaker second-quarter Philippine GDP report released [on Tuesday],” a trader said in an e-mail.

Preliminary data released by the Philippine Statistics Authority showed gross domestic product (GDP) grew by 7.4% year on year in the April to June period, slower than the 12.1% expansion in the same period last year and the revised 8.2% growth in the first quarter.

This brought the first-half print to 7.8%, above the government’s 6.5-7.5% target this year.

The peso also dropped due to data showing a wider trade deficit in June, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

The country’s trade deficit stood at $5.843 billion in June, 75.4% wider than the $3.331 billion logged a year earlier, the Philippine Statistics Authority reported on Tuesday.

Year to date, the trade balance ballooned to a $29.793-billion deficit from $17.953-billion gap a year ago.

“The local currency might depreciate anew ahead of the US consumer inflation report [on Wednesday],” the trader said. 

For Wednesday, both the trader and Mr. Ricafort gave a forecast range of P55.50 to P55.70 per dollar.  — K.B. Ta-asan