Local currency
• Previous week: The local currency traded during the week mostly at the 47 territory. On Monday the peso hit 47.33 to a dollar, and appreciated slightly on Tuesday to hit 47.1 to a dollar. The peso crossed the 46 territory on Wednesday, hitting 46.97 to a dollar, only to depreciate again on Thursday at 47.12 to a dollar, after the announcement of the 6-percent GDP growth in the third quarter. The peso ended the week at 47.145 to a dollar, with an average trading value of 47.11 to a dollar and a total traded volume of about $3 billion.
• Week ahead: The peso is not seen to stray from its current trading path, as most of the data to be released have already been expected by markets. In particular, the Philippine Statistics Authority (PSA) is set to report the inflation data at the end of the week and the US is set to release its non-farm payroll print.
Inflation
• October inflation: The PSA reported last month that inflation hit 0.4 percent in October, unchanged from the previous month’s inflation. It is the result of the significantly lower growth of consumer prices compared to the 4.3 percent posted in October last year.
This is the first time that inflation did not decrease since February this year. This is also the fourth consecutive month that inflation hit below 1 percent for the year. This brings the average inflation for the first 10 months of the year at 1.45 percent. The average inflation for January to October this year is below the government’s target range for the year of 2 percent to 4 percent. This means that for inflation to reach the government’s target for the year, it should shoot up to as high as 4.75 percent in the last two months of the year.
• November inflation: The growth of consumer prices in the country is set to have inched upward this month after following months of a declining trend this year, the central bank chief said. The Bangko Sentral affirmed that the inflation rate in the country will snap its eight-month declining trend in November to inch upward and hit a rate of about 0.4 percent to 1.2 percent during the month.
“The BSP forecast suggests that inflation could have bottomed out in October to accelerate to a 0.4-percent to 1.2-percent range in November. Lower domestic oil prices of gasoline, diesel and kerosene, as well as decline in rice prices, may continue to temper inflation impulses for the month,” the BSP chief said.
“However, the reported higher power rates, prices of selected vegetables in Metro Manila and liquefied petroleum gas may provide offsetting upside pressure,” he added. Despite the expected uptick, the central bank is still looking to miss its target for this year, which is set at 2 percent to 4 percent on average for 2015.