By Beting Laygo Dolor i Contributing Editor
The Philippine peso ended the workweek on April 26 weaker due to the growing demand for the US dollar. That high demand was fueled by US economic data showing a strong durable goods report.
The peso closed at PHP 52.18 against the greenback, down from Thursday’s PHP 52.14:US$1.
Despite the Democrat-controlled House of Representatives increasing political pressure on President Donald Trump following the release of the Mueller report with some even calling for impeachment proceedings against the chief executive, the US economy has not been negatively affected.
In fact, the US durable goods report for March was better than what the market had expected, hiking the appeal of the dollar.
The continued strength of the US economy increased pressure on the peso, causing the Philippine currency to sink to as low as PHP 52.21 to US$1.00
The peso-dollar exchange rate may continue to dip in favor of the US currency if the release of US economic data for the first quarter of the year indicates continued strength, as widely expected. That data is expected to be released in the next few weeks.
In a report, Reuters said new orders for US-made capital goods rose by the highest level in eight months last month, climbing to their highest level on record and brightening the outlook for manufacturing, in particular, and the rest of the economy, in general.
According to the US Commerce Department, orders for non-defense capital goods excluding aircraft surged 1.3 percent to an all-time high of US$70.0 billion. That surge was spurred by a jump in demand for computers and other electronic products.
There was more positive news on the US economy that would likely affect the peso-dollar exchange rate in the near term.
An economist for a local commercial bank said, “The US dollar was strong for the second week now as the market awaits Q1 US gross domestic product data.”
Because of its strong economy, the US is attractive to investors from all over the world as a “safe” place for investible funds. The US also remains the world’s biggest economy. As such, US consumption fuels much of the world’s economies.
A strong dollar means Philippine exporters will earn more for the products or services they send abroad, while a weaker peso means importers will have to pay more for the goods that they bring into the country.
At its weakest, the Philippine peso fell to as low as PHP 55 to the dollar. This was at the height of the political crisis that forced then President Joseph Estrada to eventually leave office in January 2001.