Peso strengthens ahead of BSP decision
THE PESO continued to strengthen against the dollar on Thursday as market participants awaited the policy decision of the local central bank. The peso closed at P52.62 versus the greenback on Thursday, stronger than the P52.715-perdollar finish logged on Wednesday.
THE PESO continued to strengthen against the dollar on Thursday as market participants awaited the policy decision of the local central bank.
The peso closed at P52.62 versus the greenback on Thursday, stronger than the P52.715-perdollar finish logged on Wednesday.
The peso traded stronger the whole day, opening the session at P52.60 per dollar. It went to as high as P52.575, while its intraday trough was at P52.65 versus the US currency. Dollars traded slid to $697.65 million from $765.15 million on Wednesday.
A foreign exchange trader said the peso traded within a tight range yesterday ahead of the policy statement of the Bangko Sentral ng Pilipinas (BSP) late Thursday.
“The peso traded in a tight range ahead of the BSP announcement. Near the close, we saw agent banks lifting the offer, so it closed near the intraday [low],” the trader said in a phone interview.
The central bank kept its benchmark rates steady during its last policy meeting for the year, ending the streak of five consecutive hikes this year.
The BSP’s key overnight borrowing rate remains at 4.75%. Meanwhile, the overnight lending and deposit rates stood at 5.25% and 4.25%, respectively.
The Monetary Board noted that latest inflation forecasts show a lower path over the policy horizon, as the recent reading shows signs of tapering price pressures.
Inflation stood at 6% in November, slower than the nineyear peak of 6.7% recorded in October and September.
BSP Assistant Governor Francisco G. Dakila, Jr. said the central bank now expects monthly inflation to go back below 4% at the end of first quarter of 2019, well within the government’s 2-4% target band.
The central bank raised rates by 175 basis points since May.
“As rates were unchanged, it would somehow put a support on the dollar-peso, so we can see a continued weakness in peso,” the trader said, noting that the movement for today will “not be that much” given that the central bank is widely expected to keep their policy rates steady.
On the other hand, another trader said the local unit sustained its strength amid less safe-haven demand for the dollar due to “improving US-China trade negotiations and weak US inflation data.”
For today, the first trader expects the peso to trade between P52.55 and P52.70, while the other gave a P52.50-P52.70 range. •