Peso rebounds on profit taking

THE PESO bounced back against the dollar on Tuesday due to profit taking following the local currency’s previous low.

The local unit closed at P52.195 versus the greenback on Tuesday, up 27 centavos from the P52.465per-dollar finish on Monday.

The peso traded stronger the whole day, opening the trading session at P52.33 per greenback. It slipped to a low of P52.38 intraday, while its high for the session stood at its P52.195-per-dollar close.

Dollars traded climbed to $750.65 million from the $705.25 million that switched hands during the previous session.

Traders interviewed yesterday said the peso strengthened against the dollar due to profittaking after it plunged to a near 12-year low on Monday.

“The local currency appreciated as profit-taking ensued after the peso dropped to record lows,” a foreign exchange trader said through e-mail.

The trader added that the peso regained strength despite “hawkish speeches from various [ US Federal Reserve] officials.”

Philadelphia Fed President Patrick Harker said on Monday the US monetary authority should hike rates two or three times and could move as early as next month as inflation rises, Reuters reported.

Meanwhile, another trader said there was profit-taking ahead of the minutes of the May meeting of the Federal Open Market Committee (FOMC).

“The peso kept up with the dollar’s move, as the dollar lost gain. We think it’s more of profit-taking ahead of the [release of the] FOMC meeting minutes on Thursday.”

The Fed held interest rates steady at its May meeting, although it expressed confidence that inflation’s rise to its 2% target would be sustained.

For today, the first trader sees the peso moving between P52.05 and P52.35 versus the dollar, while the other gave a tighter range of P52.15-P52.30.

“The peso might weaken as investors would likely position on expectations of hawkish signals from the FOMC policy meeting minutes due to be released on Thursday,” the first trader noted.

However, the second trader said the peso might “move within the range with an upward bias.”

“The peso may sustain its momentum if either the dollar moves flat or lower tonight,” the trader said on Tuesday. •