Peso edges higher against dollar

THE PESO strengthened slightly against the dollar on Wednesday amid rising US Treasury yields.

The local currency ended the session at P52.31 against the greenback yesterday, a centavo stronger than the P52.32- perdollar close on Tuesday.

The peso opened the session stronger at P52.24. It slid to as low as P52.38, while its best showing for the day was at P52.19 against the greenback.

Dollars traded soared to $714.64 million from the $620.21 million which switched hands the previous session.

Traders interviewed yesterday said the peso moved sideways as the yield on 10-year US Treasuries breached the psychological 3% level.

“It’s the continued strength of the US dollar... as 10-year yields hold above 3%,” Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said in a text message.

A trader shared the same sentiment, adding that the greenback was “strong across so [the peso] followed suit.”

Reuters reported that the benchmark US 10-year Treasury yield pushed further past the key 3% level on Tuesday. The Treasury yields are being used as a global point of reference for interest rates on everything from home loans to corporate bonds.

This brought the dollar index against the basket of six currencies rising 0.4% to 91.093.

The trader added that the market saw heavy buying intraday, while investors sold after the open and near the close due to “profit-taking.”

Meanwhile, another trader said the “local currency moved sideways due to lack of economic data releases” and as the concerns over the geopolitical noise subsided in the markets.

For today, the traders expect the peso to weaken. The first trader sees the local currency moving between P52.25 and P52.40 versus the dollar, while the other gave a wider range of P52.15 to P52.45.

“The peso is expected to weaken ahead of likely dovish policy stance from the European Central Bank which might further boost the dollar,” the second trader noted.

Meanwhile, other emerging Asian currencies remained under selling pressure on Wednesday as benchmark US bond yields poked above the 3% level and lifted the dollar.

Indonesia’s rupiah was left wallowing around recent twoyear lows even as the central bank intervened to stabilize the currency.

“There’s a lot more concern that it could spill over into regional bond outflows,” said Chang Wei Liang, foreign currency strategist at Mizuho Bank.

“If you look across the broader fundamentals, there is support for another uptick in yields with oil prices flirting with recent highs.”

Higher oil prices point to increased inflationary pressure, which typically undercuts bond prices and supports bond yields.