Peso may strengthen further before GDP

THE PESO could trade stronger this week and even return to the P58 level before the release of Philippine gross domestic product (GDP) growth data.

On Friday, the local unit closed at P59.09 per dollar, rising by seven centavos from its P59.16 finish on Thursday, data from the Bankers Association of the Philippines showed.

Week on week, the peso jumped by 26 centavos from its P59.35 close on Jan. 16.

Easing trade concerns after US President Donald J. Trump backed down on his earlier threats to impose tariffs on some European countries to get Greenland supported the local unit, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The dollar-peso closed lower mostly because of the easing tensions between the US and Greenland and renewed demand for the peso following news about President Marcos not wanting (the peso) to reach the P60 mark,” a trader said by telephone on Friday.

Last Thursday, Palace Press Officer Clarissa A. Castro said President Ferdinand R. Marcos, Jr. hopes that the peso-dollar exchange rate will not reach P60, but reiterated that the central bank sees no need for market intervention.

On Friday, BSP Governor Eli M. Remolona, Jr. said the central bank will continue to intervene in the foreign exchange market only to minimize sharp movements.

Asked if the central bank would intervene once the peso hits P60 against the dollar, he said: “Depends (on) how it gets there. Just because it’s P60 doesn’t mean we’ll defend it.”

“We do what we’ve always done,” Mr. Remolona said. “We try to avoid sharp movements in the peso.”

For this week, the trader said the market’s focus will be on the release of fourth-quarter and full-year 2025 Philippine GDP data on Thursday (Jan. 29).

A BusinessWorld poll of 18 economists and analysts yielded a median estimate of 4.2% for fourth-quarter growth.  If realized, this would put the full-year average at 4.8%, below the government’s 5.5%-6.5% target.

Players will also await the release of US economic data and the Federal Reserve’s policy meeting this week, the trader added.

Investors widely expect the Fed to hold rates steady when it gives its monetary policy decision on Wednesday at the end of its two-day meeting, Reuters reported. Fed funds futures are pricing in at least one more cut this year.

The trader sees the peso moving between P58.90 and P59.30 per dollar this week, while Mr. Ricafort expects it to range from P58.75 to P59.25. — A.M.C. Sy