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Peso rises on sluggish import prospects after weak Q1 GDP data
The Philippine peso strengthened versus the greenback on Tuesday, closing at P47.81 per dollar, appreciating by 5.5 centavos from its P47.865 finish on Monday.
This appreciation occurred despite data showing the economy continued to contract in the first quarter, with Philippine economic output shrinking by 4.2%.
The peso appreciated as the market factored in the impact of the gross domestic product (GDP) drop on the country's imports, which could affect the currency.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted that the softer-than-expected GDP could signal a slower recovery in imports and the demand for dollars to pay for them.
Dollars exchanged rose to $837 million on Tuesday from $715.25 million on Monday.
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The Philippine Stock Exchange index (PSEi) gained anew on Tuesday, with the main equities index rising by 0.15 percent, or 9.42 points, to 6,326.83 points.
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The Philippine economy contracted by 4.2% in the first quarter of 2021, marking its fifth consecutive quarter of decline and the longest recession since the Marcos era.
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Philippine shares experienced a slight increase on Tuesday, driven by bargain hunting after the market declined due to worse-than-expected economic contraction data.
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The Philippine Stock Exchange index (PSEi) declined as investors favored US assets, while the peso hit a two-month high against the US dollar, reaching the 47-level. The PSEi dropped 0.38 percent, or 24.07 points, to 6,258.71 points, with All Shares also falling slightly to 3,877.43 points. The Mining and Oil, Services, and Industrial sectors gained, while Property, Holding Firms, and Financials sectors declined during the trading day. The peso closed at 47.855, its strongest level since February 15, driven by improved employment data and a decrease in new Covid-19 cases. Economist Michael Ricafort highlighted that the peso's strength was also influenced by the decline in the unemployment rate to 7.1 percent and a compromise agreement on pork import tariffs. The ADP report showed that 742,000 new jobs were created in the US last April, higher than the 517,000 in March but lower than the expectations of 830,000. The peso improved further against the greenback after ending the day at 47.855 from 47.98 a day ago.
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