The Philippine peso weakened against the US dollar on Monday, ahead of the release of June inflation data.
The local unit closed at P61.491 per dollar, declining by 7.6 centavos from its P61.415 finish on Friday.
The peso opened Monday's session weaker at P61.50 against the dollar, trading within a narrow range that reached an intraday high of P61.45 and a low of P61.55 against the greenback.
Dollar exchange fell to $876.75 million on Monday from $1.603 billion on Friday.
The peso's weakness is attributed to expectations of an elevated headline inflation level for June, a trader said.
Chief economist Michael L. Ricafort of Rizal Commercial Banking Corp. expects the June consumer price index (CPI) to have eased slightly from the previous month, following the recent decline in global crude oil prices and some rollback in local fuel pump prices.
This could reduce the odds of further tightening by the Bangko Sentral ng Pilipinas (BSP), he added.
The Philippine Statistics Authority will release June inflation data on Tuesday, July 7.
A poll of 18 analysts yielded a median estimate of 6.6% for June headline inflation, slower than the 6.8% recorded in May but faster than the 1.4% in the same month last year.
This is within the BSP's 6%-7% forecast, and if realized, June inflation would ease for a second straight month and be the slowest since the 4.1% recorded in March.
However, it would also be the fourth consecutive month that the CPI would breach the BSP's 2%-4% tolerance range.
Oil prices eased globally and domestically last month, offering consumers some relief following nearly three months of oil price spikes.
Local fuel retailers lowered the price of gasoline by as much as P7.50 per liter and diesel by as much as P21.19 per liter, but slightly raised it to about P1.98 per liter for kerosene.
BSP Governor Eli M. Remolona, Jr. has left the door open to additional hikes as they aim to bring inflation back to their 3% target.
He said the economy can still absorb another 25-basis-point (bp) hike, with growth expected to recover to above 3% this semester.
The Monetary Board has delivered a total of 50 bps in rate increases since April, bringing the policy rate to 4.75%.
The inflation report will be the key trading driver for Tuesday, a trader said.
The peso is expected to range between P61.40 and P61.60 per dollar on Tuesday, according to the trader and Mr. Ricafort.
