Peso up on manufacturing PMI

THE PESO climbed as the Philippine factory activity improved. — BW FILE PHOTO

THE PESO strengthened versus the greenback on Tuesday on the back of strong local manufacturing data.

The local unit closed at P50.39 per dollar on Tuesday, appreciating by 2.5 centavos from its P50.415 finish on Friday, based on data from the Bankers Association of the Philippines.

Financial markets were closed on Monday in view of All Saints’ Day.

The peso opened Tuesday’s session weaker from its previous close at P50.46 per dollar. Its weakest showing was at P50.52, while its intraday best was at P50.36 against the greenback.

Dollars exchanged increased to $1.149 billion on Tuesday from $983.38 million on Friday.

The peso gained versus the greenback on Tuesday as market sentiment improved following the release of strong manufacturing data, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Factory activity in October was the strongest in seven months, with the Philippines Purchasing Managers’ Index (PMI) reading at 51, IHS Markit reported on Tuesday. This is higher than the 50.9 in September and above the 50 mark that separates growth from contraction.

IHS Markit noted that growth in factory activity last month was due to the easing of restriction measures and the stabilizing of new orders.

In contrast, the US posted weaker manufacturing data last month, which a trader said also boosted the peso versus the dollar.

The Institute for Supply Management said the index of national factory activity slipped to 60.8 in October from 61.1 in September, Reuters reported Monday.

Based on the report, supply chains in the US were constrained as all industries saw record-long lead times for raw materials.

For Wednesday, Mr. Ricafort gave a forecast range of P50.30 to P50.50 per dollar, while the trader expects the local unit to move within P50.20 to P50.45. — L.W.T. Noble with Reuters