Peso slips on hawkish Fed
THE PESO slipped on Thursday, inching back to the P52 level intraday, as tracked the dollar in tight trade due to the hawkish stance of the US central bank.
The local unit closed the session at P53.09 versus the greenback on Thursday, inching down by a centavo from the P53.08-per-dollar finish the previous day.
The peso strengthened as it opened the session at P52.985 per dollar. It climbed to as high as P52.935 during the day, while its worst showing was yesterday’s close.
Dollars traded rose to $849.2 million from the $ 642.13 million that exchanged hands the previous day.
A foreign exchange trader said the peso “traded within a tight range” as it tracked the movement of the dollar.
“I think there’s some corporate demand from power companies, and at the same time, the peso followed the dollar movement [on Thursday],” the trader said in a phone interview.
“The peso closed relatively sideways as market players took advantage of the stronger peso during the day after the Fed decided to keep their policy rates steady,” another trader said in an e-mail.
Reuters reported that the dollar index climbed a tad against a basket of six currencies at 94.7, after the US Federal Reserve gave a hawkish assessment on the American economy, affirming to stay on course of a gradual monetary policy tightening.
The central bank has kept its interest rates steady during the twoday policy meeting. The Fed said the US economy remains strong on the back of sustained job growth and increased household spending, noting that the monetary authority is on track to tweak borrowing costs next month.
Meanwhile, Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said the movement may have been due to a recent directive by US President Donald J. Trump.
Most Asian currencies weakened against the dollar on Thursday as Mr. Trump raised the stakes in the trade dispute with Beijing with a threat to slap higher tariffs on Chinese goods worth $200 billion to 25% from the initial 10%.
“The US move is again putting pressure on the probable adverse impact of a US-China trade war,” Mr. Asuncion added.
For Friday, Mr. Asuncion expects the peso to move between P53 and P53.20, while the second trader gave a P52.95-P53.15 range.