Peso returns to P52:$1 level as investors await Powell speech

THE PESO weakened against the dollar anew on Tuesday, touching the P52 level once more, as market players remained cautious ahead of the testimony of Federal Reserve Chair Jerome H. Powell to the US Congress later in the day.

The local currency finished at P52.03 against the greenback yesterday, losing 17 centavos from its P51.86-per-dollar close on Monday.

The peso traded weaker the whole day, opening the session down at P51.95 versus the dollar, which was also its best showing for the day. Its intraday low, meanwhile, was at P52.07 to the greenback.

Dollars traded increased to $648.7 million on Tuesday from the $ 516 million that changed hands in the previous session.

Foreign exchange traders interviewed on Tuesday said the market was “fairly quiet” as they preferred to wait for cues from Mr. Powell’s testimony.

“[ Yesterday, we saw a] very strong dollar against the peso. For the rest of the day, it was fairly quiet because the market is cautious ahead of Powell’s speech. But still, the momentum is trending higher,” a trader said by phone.

Mr. Powell’s speech scheduled yesterday night was set to be his first major appearance after he replaced Janet L. Yellen at the Fed’s helm.

Mr. Powell’s testimony is seen as critical for financial markets at a time many investors are nervous about the Fed’s policy normalization following years of stimulus after the financial crisis almost a decade ago.

For Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, a bullish view on the US economy is generally good for the Philippine economy.

“This means increasing exports, growing remittances and more business process outsourcing [firms],” Mr. Asuncion said, adding that Mr. Powell’s testimony could translate into a “stronger peso.”

Meanwhile, another trader said the local currency depreciated yesterday “Federal Reserve member Quarles hawkish remarks of US economic growth as markets find cues ahead of Federal Reserve chair Powell’s first testimony.”

On Monday, Federal Reserve Governor Randal K. Quarles, in a speech, affirmed market expectations of three interest rate hikes from the Fed this year.

“I am fairly optimistic about the current state of the economy. Along many dimensions, it has been quite some time since the economic environment has looked as favorable as it does now,” Mr. Quarles said in a conference in Washington DC.

He added that the American economic growth of around 3% is a “considerable step-up.”

For today, the first trader sees the peso moving between P52 and P52.20 against the dollar, while the second trader gave a wider forecast range of P51.85 to P52.25.

Most emerging Asian currencies, similar to the dollar, moved only marginally on Tuesday as markets awaited the first US congressional testimony by Mr. Powell.

The dollar edged down slightly, but was still above its three-year low. The dollar’s index against a basket of six major currencies inched down 0.1% to 89.728.

The 10- year US Treasuries yield eased to 2.864% dropping further from its four-year peak of 2.957% touched on Feb. 21. •