Peso closes stronger against US dollar

Posted on July 27, 2016

THE PESO closed stronger than the dollar on Tuesday after news of Japan’s planned fiscal stimulus stoked investor’s sentiment in the region.

Peso bills are seen in this file photo.
The local currency closed at P47.13 against the greenback at the close of Tuesday’s trading, gaining 6.5 centavos compared to its P47.195 close versus the foreign unit seen during the previous session.

The peso opened the day’s trading at P47.23 per dollar, a shade stronger than its weakest intraday level of P47.24 against the greenback. The local unit’s strongest point on Tuesday was logged at P47.13 per dollar, which is also the peso’s closing rate.

Volume at the foreign exchange market increased to $367.8 million from the previous session’s $190.5 million, data from the Philippine Dealing System showed.

Traders attributed the strength of the local currency to caution ahead of the United States and Japan’s policy-setting meetings towards the end of the week and expectations of fiscal stimulus from Tokyo.

“The peso appreciated slightly as investors traded cautiously ahead of the monetary policy meetings of the US and Japan,” a trader said yesterday.

“Expectations of further monetary easing from the Bank of Japan and bets of a delay in the US interest rate hike might have improved market sentiment, despite the decline in oil prices,” the trader added.

Another trader said: “Reports that Japan is looking to inject 6 trillion ($57 billion) in direct fiscal outlays into its economy over the next few years -- double the amount initially planned -- boosted sentiment in the region and caused increased appetite for risk in nearby economies.”

“Market players may have also started to reposition their bets ahead of the Fed policy meeting and Japan’s own rate interest decision this week,” the trader added.

Investors are expected to largely sit on the sidelines before the Federal Open Market Committee on July 26-27 and the Bank of Japan’s policy setting meeting on July 28-29.

For Wednesday, a bank trader said there might still be sideways movement due to expectations of mixed US economic data.

“US consumer confidence is expected to deteriorate while US reports on new home sales and service sector activity are expected to improve,” the trader said.

The dollar-peso pair is seen moving within the P47 to P47.25 range today, traders said. -- Imee Charlee C. Delavin