Peso rises to new six-month high
THE PESO continued to strengthen against the dollar as trading resumed on Wednesday amid uncertainty over the US Federal Reserve leadership.
The local currency closed the session at P49.81 against the greenback yesterday, 12 centavos stronger than its P49.93- perdollar close on Friday.
Wednesday’s finish was also the peso’s best close since it ended at P49.63 against the dollar last June 15.
The peso traded stronger the whole day as it opened the session at P49.80, also its intraday high. Its worst showing, meanwhile, was just at P49.92 against the dollar.
Trading volume dropped to $634.2 million yesterday from the $742.2 million that changed hands in the previous trading session.
“The peso appreciated at the first trading day of the year amid the local tax reform bill’s effectivity this year along with the overall global weakness of the dollar on uncertainty over the Federal Reserve’s direction under incoming Fed chair Jay Powell,” a trader said in an e-mail on Wednesday.
Economists are concerned how the Fed will perform this year in terms of its interest rate policies, given that the experienced members of the Fed’s board of governors will step down from their positions.
Meanwhile, another trader noted that yesterday’s trading was mostly just consolidation.
“[ Yesterday, we didn’t see] aggressive offers in the offshore market so I’m not sure if that’s an indication. I guess we’ll continue to consolidate,” the trader added.
A third trader attributed the peso’s rally to accumulated flows over the long weekend and the upbeat performance of the local bourse.
Yesterday, the Philippine Stock Exchange index closed at another all-time high of 8,724.13, up 1.93% or 165.71 points.
For today, the second trader said the peso will move between P49.75 and P50 against the dollar, while the first trader gave a mostly stronger range of P49.65 to P49.85.
“The peso is expected to continue [ to] strengthen primarily due to profit taking prior to the release of December FOMC (Federal Open Market Committee) minutes...,” the first trader said.