Peso gains strength, back at 50.93 to $1

The peso gained 16.50 centavos yesterday, piercing the 50 to $1 level due to the early resignation of US Federal Reserve vice chair Stanly Fischer to give the Trump administration a chance to shape the US central bank.

The local currency closed at 50.93, 16.50 centavos higher than Wednesday’s 51.095 to $1.

This was the strongest level for the peso since closing at 50.795 to $1 last Aug. 10.

Guian Angelo Dumalagan, market economist at the Land Bank of the Philippines, said the peso appreciated due to the early resignation of Fischer effective mid-October to give US President Donald Trump more space to reshape the direction of the central bank.

The term of the veteran US central banker who helped set the course for modern monetary policy is supposed to expire in June next year.

Dumalagan said Fischer is one of the ‘hawkish’ members of the Federal Open Market Committee.

The Fed raised interest rates in March and June as part of the normalization of interest rates in the US.

BDO Unibank Inc. chief market strategist Jonathan Ravelas said the peso is seen trading between 50.70 and 50.80 to $1 in the near term.

He said the dollar was weaker yesterday, pushing the peso below the 51 to $1 level.

Traders also cited the tension involving North Korea as well as the surprise rate hike by the Bank of Canada.

The Canadian central bank jacked up rates by 25 basis points to one percent and left the door open to more rate hikes this year.