Peso flat ahead of BSP
THE PESO ended almost flat against the dollar on Thursday as market players stayed at the sidelines ahead of the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board meeting and amid uncertainties in the United States and Europe.
The local currency finished at P50.325 versus the greenback yesterday, barely changed from its P50.32 per dollar close the previous session.
The peso opened Thursday’s session slightly weaker at P50.34 versus the foreign currency, while its intraday trough was at P50.37 per dollar. The local currency’s best showing for the day was just at P50.305 against the greenback.
Dollars traded on Thursday jumped to $ 551.7 million from the $ 381 million that changed hands the previous session.
“The market became risk-off after…other Asian currencies dropped as well,” one trader said in a phone interview on Thursday. “So it all depended on the news that got out regarding [US President Donald J.] Trump’s push on ‘Obamacare.’”
Mr. Trump was to meet later in the day with members of the Freedom Caucus, a conservative Republican faction which have demand changes to the bill, which is Mr. Trump’s first major legislation since taking office.
Fierce opposition could delay promised tax reforms, which have boosted US financial markets.
Another trader said: “The market just consolidated as [investors] were all waiting for the BSP interest rate decision.”
“We traded within range due to worries over Brexit that caused some uncertainties, therefore, risk aversion to markets. So if it’s a worry to the market, they will keep on buying the dollar” the trader added.
For Friday, one trader said peso may play between P50.20 and P50.40- to- the- dollar while ahead of the Brexit plans announcement on March 29.
The other trader, however, said today’s range trading will highly depend on the central bank’s Monetary Board meeting, but noted that next week may see the pair trading within P50.25 to P50.35.
The central bank, at the conclusion of its policy review, announced it kept interest rates steady at 3% for its overnight reverse repurchase facility. The corresponding interest rates on the overnight lending and deposit facilities were also unchanged. It likewise left reserve requirement ratios untouched.
The BSP said its decision is based on its assessment that the outlook for inflation remains manageable, consistent with favorable growth prospects.
Most Asian currencies fell against the dollar on Thursday as investors waited to see if Mr. Trump could push through a health bill to replace “Obamacare,” which would open the way for tax cuts.
The Thai baht fell nearly a quarter of a percent on strong dollar demand from oil companies. The Singapore dollar also weakened after data showed a pickup in inflation was mild and in line with expectations.
Analysts said a rise in the 10-year US Treasury yields also limited Asian currencies’ upside. The 10-year US Treasury yield stood at 2.4086%, slightly up from Wednesday’s US close of 2.3960%.