The Philippine peso experienced a slight decline against the US dollar Tuesday, closing at P58.521. This subtle shift followed growing concerns about the nation’s economic growth and anticipation of crucial economic data releases from the United States later this week.
Trading opened flat at P58.49, but the peso fluctuated throughout the day, reaching a low of P58.54 and a high of P58.33. Overall trading volume increased significantly, reaching $1.49 billion – a jump from Monday’s $1.22 billion.
The downward pressure on the peso stemmed, in part, from a cautious assessment of the Philippines’ GDP growth. Recent statements from the Economy Secretary suggest the country may struggle to meet its 5.5-6.5% growth target for the year, impacted by both a recent corruption scandal and unfavorable weather conditions.
This potential shortfall marks a worrying trend. Should the forecast hold true, 2025 would be the third consecutive year the Philippines fails to achieve its projected GDP growth. The economy’s expansion slowed to 4% in the third quarter, the weakest performance in over four years, bringing the year-to-date average to 5%.
Adding to the peso’s vulnerability is the looming release of US economic data. Traders are particularly focused on Friday’s Personal Consumption Expenditures (PCE) inflation report, anticipating it will influence expectations surrounding potential interest rate adjustments by the US Federal Reserve.
Market sentiment suggests a strong possibility – currently estimated at 87% – of a Fed rate cut in December. Investors are also closely watching Wednesday’s ADP employment report for further clues about the health of the US economy and the Fed’s likely course of action.
Geopolitical anxieties also played a role in the peso’s movement. Rising oil prices and concerns over a recent drone strike impacting Black Sea Terminal infrastructure contributed to a strengthening dollar, typically seen during Asian trading hours.
Looking ahead, traders predict the peso will likely trade within a narrow range of P58.40 to P58.65 on Wednesday. Some analysts anticipate a slightly wider range, from P58.30 to P58.60, reflecting the ongoing uncertainty and sensitivity to global economic signals.
