Peso rebounds as Fed turns dovish

THE PESO rebounded against the dollar on Thursday, rising from a near two-month low, on the back of dovish minutes from the US Federal Reserve’s May meeting and as it tracked its regional peers, as market players await for clearer signals on the government’s martial law declaration in Mindanao.

The local currency ended at P49.83 versus the greenback yesterday, climbing 16.5 centavos from its P49.995 close on Wednesday.

The peso was traded stronger yesterday as it opened the session at P49.92 versus the dollar, while its worst showing for the day was seen at P49.95 against the foreign currency. Its peak was at P49.82 to the dollar.

Dollars traded slightly decreased to $551.5 million on Thursday from the $582.4 million that changed hands in the previous session.

One trader attributed the local currency’s gain versus the greenback to a broad correction and after it followed the direction of its neighboring currencies.

“Today the peso just retraced the trading, it’s just a correction and it tracked Asian currencies since the market is still in a bit of a chaos as they are still waiting for a clear signal regarding the president’s declaration of martial law,” the trader said in a phone interview on Thursday.

President Rodrigo R. Duterte placed the whole region of Mindanao under martial law on Tuesday night after government forces clashed with Islamic State ( IS)- inspired Maute group led by Isnilon Hapilon in Marawi City, Lanao del Sur.

Mr. Duterte also said on Wednesday that he may place the entire country under martial law as well should IS-inspired terrorist groups reach the region of Visayas and Luzon.

Another trader said the rise in local stocks and the Federal Open Market Committee May meeting minutes also affected the currency market.

“The Fed minutes was just as expected, and authorities were indecisive of their rate hike decision so market read this as rather dovish minutes,” the trader said.

Federal Reserve policy makers agreed they should hold off on raising interest rates until it was clear a recent US economic slowdown was temporary, though most said a hike was coming soon, minutes from their last policy meeting showed on Wednesday.

While investors continue to see a rate increase as highly likely next month, the minutes showed that the Fed’s rate- setting committee “generally” believed it hinged on the economy rebounding from its sharp slowdown in the first quarter.

For today, one trader said the peso may play within P49.80 to P49.95 against the dollar while the other sees the pair trading between P49.75 and P49.90.

“If we see any brewing news tonight, the peso may revisit the P50-to-thedollar level, but if nothing grave happens, the peso could go as low as P49.75,” one trader noted. —