Peso strengthens further
THE PESO sustained its strength on Tuesday to log a fresh five-month high as the dollar remained weak following dovish remarks from US Federal Reserve officials.
The peso ended the session at P52.39 versus the greenback on Tuesday, 18 centavos stronger than its P52.57 finish on Monday.
This was the peso’s best showing in more than five months or since it closed at P52.385 per dollar last June 6.
The peso opened the session stronger at P52.53 versus the dollar, soaring to as high as P52.39, which was also yesterday’s closing rate. Its intraday low, on the other hand, stood at P52.63 against the greenback.
Trading volume rose to $763.81 million from $561.81 million the previous day.
Traders interviewed yesterday said the peso sustained its strength amid a weaker dollar versus the other major currencies.
“We saw a continuation of the downtrend as the dollar index continued to trade lower on the back of dovish statements by two Fed officials the other day,” a trader said in a phone interview.
Fed Vice Chairman Richard Clarida acknowledged signs of slowing global growth which “is going to be relevant” for the outlook on the US economy, adding that the Fed is “close to being neutral” and that future rate hikes might be fewer in number.
“The peso closed at P52.39... after some Fed officials signalled lower global economic growth (more dovish) that could reduce the odds of Fed rate hikes on Dec. 19 and in 2019,” Michael L. Ricafort, Rizal Commercial Banking Corp. economist, said in a text message.
He added that “lower global oil prices lingering among 11-month lows” as well as the narrower balance of payment (BoP) deficit also supported the latest peso gains.
The Bangko Sentral ng Pilipinas on Monday said the country’s BoP position logged a $458-million deficit in October, narrower than the $2.696-billion deficit in September which was the widest in four years.
For Wednesday, the first trader expects the peso to trade between P52.25 and P52.45, while the other gave a P52.30-P52.50 range.
“The peso might strengthen further due to expectations of softer US durable goods report for October that could heighten fears of a possible slowdown in the US economy,” the second trader said in an e-mail.