Foreign Exchange
Previous week: The local currency did not show much of a surprise in the previous week, trading steadily at the upper bound of the 43 territory, but a declining trend. The peso opened the week at 43.68 against the US dollar on Monday, and remained broadly steady at 43.645 to a dollar on Tuesday. However, the peso dipped to 43.83 to a dollar on Wednesday and remained at that level after the holiday break in trading to end the week on Friday at 43.835. Most of the movements during the week, particularly the loss of value on Wednesday, was due to the positive data releases favoring a recovery in the US economy.
Week ahead: According to the Bank of the Philippine Islands’s (BPI) review, the peso will continue to trade steadily against the US dollar in the coming week, but with a downward bias as the US continues to post robust economic data that is supportive of growth. Another big data that market should watch out for is the growth numbers of the country for the second quarter of the year.
May’s imports: The Philippines’s total import bill fell by 9.6 percent in May this year. This is the biggest decline in imports of the country since the second quarter of 2012 when imports went down by 13.3 percent. In absolute terms, May’s import bill was only at $4.77 billion compared to last year’s $5.27 billion.
June’s imports: In a recent report on its outlook for the Philippine economy, Moody’s Analytics said that imports likely recovered toward the end of the second quarter of the year on a par with the growth of exports in the country. Likewise, the country faces heightened import numbers in the coming months as agriculture officials try to source produce from other countries to patch up the supply constraint in the country.
June’s domestic liquidity: The central bank reported on Thursday that the domestic liquidity (M3) growth of the country expanded at 23 percent in end-June this year to reach P7.1 trillion. This is slower than the 28.4 percent seen in May this year. Earlier this year, the central bank moved to adjust monetary conditions through its policy tools after the country’s central monetary authority became wary of the strong cash supply growth in the country.
July’s domestic liquidity: Earlier this month, the central bank governor said they expect the cash supply circulating in the system to continue to go down with the three targeted tools in place. “We expect this to continue. It should continue to go down and this would suggest that the measures that we adopted are working, especially the two increases in reserve requirements and the increase in SDA [special deposits account] rates,” central bank Governor Amando M. Tetangco Jr. said. Bianca Cuaresma
