THE PESO is likely to stay at the P56-per-dollar level this week as the Bangko Sentral ng Pilipinas (BSP) is widely expected to resume its easing cycle.
On Friday, the local unit closed at P56.821 per dollar, jumping by 27.4 centavos from its P57.095 finish on Thursday, Bankers Association of the Philippines data showed.
This was the peso’s strongest finish in six months or since it closed at P56.295 on Oct. 4, 2024.
Week on week, the peso rose by 56 centavos from its P57.381 finish on March 28.
“The peso strengthened on dollar selling across the board amid growing market concerns after US President Donald J. Trump announced tariffs and after the ISM’s (Institute for Supply Management) manufacturing PMI (purchasing managers’ index) data overnight,” a trader said by phone interview.
The local unit surged as the dollar declined to new lows on Friday due to lower global crude oil prices and US Treasury yields, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
In the Asian session early on Friday, the US dollar sank and the safe-haven yen strengthened towards a six-month peak, as traders weighed the fallout from Mr. Trump’s aggressive and far-reaching new tariff measures, Reuters reported
The dollar slipped toward a six-month trough against the euro prior to the release of a crucial monthly US payrolls report later in the day that will offer clues to the health of the economy and the outlook for monetary easing.
Traders now predict four quarter-point interest rate cuts from the Federal Reserve in the remainder of this year, and reduced the odds of further Bank of Japan tightening to almost nil.
Shockwaves from Mr. Trump’s harsher-than-expected tariffs were still rippling through markets more than 24 hours after being unveiled.
Stocks took the brunt of a searing sell-off, driving investors to the safety of assets such as bonds and gold on fears that a full-blown trade war could trigger a global slowdown and stoke inflation.
The dollar had already been on the back foot this year after initial euphoria over Mr. Trump’s policy agenda turned into worry that his focus on trade barriers could lead to stagflation, or even a US recession.
The dollar index, a measure of the currency against a basket of six major peers, plunged 1.9% on Thursday, its worst day since November 2022, and was down a further 0.3% in the latest session.
Mr. Trump said he would impose a 10% baseline tariff on all imports to the United States and higher duties on some of its biggest trading partners, including a rate of 20% on the European Union (EU) and a rate of 24% on Japan.
China now faces combined duties of some 64%, when also factoring in a tariff of 10% that Mr. Trump levied in his first presidential term.
Both China and the EU vowed countermeasures, raising the risk of a broader trade war.
Later on Friday, the US dollar rose against major currencies after Federal Reserve Chairman Jerome H. Powell acknowledged the repercussions of larger-than-expected US tariffs and signaled a cautious tone on future easing.
Mr. Powell said tariffs increased the risk of higher inflation and slower growth, highlighting the difficult path ahead for policy makers at the US central bank.
Mr. Powell’s comments followed data earlier in the day showing that nonfarm payrolls rose by 228,000 jobs last month after a downwardly revised 117,000 rise in February, well above the 135,000 forecast. The unemployment rate ticked up to 4.2% from 4.1%.
The dollar index rose 0.71% to 102.72 in afternoon trading on Friday.
For this week, the trader said the market will likely react to the US nonfarm payrolls report, with the BSP’s policy meeting on Thursday also expected to be a key trading driver.
All 17 analysts in a BusinessWorld poll expect the Monetary Board to cut its policy rate by 25 basis points (bps) to 5.5% at its April 10 meeting.
This would mark its first easing move since December as the BSP unexpectedly kept benchmark interest rates steady in February to assess the potential impact of the Trump administration’s policies on the Philippines. The Monetary Board has brought down borrowing costs by a cumulative 75 bps since it began its rate-cut cycle in August last year.
BSP Governor Eli M. Remolona, Jr. last month said there is a “good chance” that the central bank will cut rates by 25 bps at its April 10 meeting, especially if March inflation is better than expected. He also signaled cuts of 50-75 bps for this year.
The trader sees the peso moving between P56.60 and P57 per dollar this week, while Mr. Ricafort expects it to range from P56.60 to P57.10. — A.M.C. Sy with Reuters
