Peso rebounds on selling
THE PESO rebounded against the dollar on Wednesday as agent banks sold their dollars to temper market volatility.
The local unit closed Wednesday’s session at P52.55 versus the greenback, 15 centavos stronger than the P52.70-per-dollar finish on Tuesday.
The peso opened the session slightly weaker at P52.75 per dollar, slipping to as low as P52.86 intraday. However, it closed the session at its best showing.
Trading volume grew to $1.755 billion from the $1.744 billion that changed hands the previous session.
Traders interviewed yesterday said the peso appreciated against the dollar after days of volatile trading as agent banks tried to sell the greenback.
“I think the reason why we’re seeing lower close from yesterday was due to agent banks selling dollar-peso. We’ve seen aggressive offers hitting the bids of agent banks,” the first trader said in a phone interview yesterday.
“With that, we saw a slight improvement in the peso.”
Another trader said banks pushed the peso higher as they tried to quell market volatility seen in the previous trading sessions.
“We saw the dollar-peso moved around 57 basis points on Tuesday. Today it moved around 31. Maybe they’re trying to control the depreciation of the peso against the dollar,” the trader said on Wednesday.
Both traders meanwhile speculated that the Bangko Sentral ng Pilipinas (BSP) intervened in the trading.
“I cannot confirm but probably it might be from the central bank. We don’t know for sure. But the movement looks like it’s from the agent banks,” the first trader said.
As the country’s monetary authority, the BSP sometimes conducts “tactical interventions” to temper any sharp swings that may cause the peso to appreciate or depreciate.
The trader added that market offshore is “bullish” given the pronouncements of new BSP Governor Benjamin E. Diokno.
“I think the market offshore is bullish, given the interview of Governor Diokno saying that the BSP might cut reserve requirements by one [percentage point] every quarter. He also said that the peso may trade between P52 and P55.”
In a television interview, Mr. Diokno hinted at the possible easing of reserve standards for banks once every three months, saying the central bank will “look at the data.”
He added that the local currency is still within the P52-P55 target of the government.
“If it’s P52-P55, we’re in the low end of the range. I guess in a way it gave a little bit of a reason for market players to try to buy dollar-peso,” the first trader added.
For today, the first trader expects the peso to move between P52.50 and P53, while the other one gave a P52.30-P52.80 range.