THE PESO rebounded on Thursday amid the stronger dollar overnight following the upbeat outlook on inflation from the US Federal Reserve.
The local currency closed Thursday’s session at P51.67, 19 centavos stronger than the P51.86-per-dollar finish on Wednesday.
The peso opened the session weaker at P51.95, which was also its worst showing for the day. Intraday, it soared to a P51.67 high, which was also its closing level.
Dollars traded soared to $723.1 million from Wednesday’s $556.2 million.
Currency traders said the peso opened weaker as the dollar strengthened overnight following the Fed meeting.
“The peso opened stronger in the morning trade after the hawkish outlook on inflation from the US Federal Reserve despite their decision to keep policy rates,” a trader said in a phone interview.
After its two-day meeting, the Fed decided to keep its benchmark rates steady, Reuters reported.
It also expressed confidence that a recent rise in inflation near its 2% target would be sustained.
“It shows that the Fed is meeting their inflation target, implying in the market that we don’t see the Fed accelerating or decelerating their rate hike cycle,” the trader added.
The trader said the peso corrected in the afternoon session as it soared to its P51.67 close.
“Despite the dollar strength initially, we saw heavy selling around P51.90 level, so this shows to us that the interest is to push the peso [stronger]. Come afternoon, it underwent correction so we closed at the [high].”
For Friday, May 4, the currency traders see the peso moving higher versus the dollar. The first trader forecasted that the local currency will trade between P51.50 and P51.73, while another gave a P51.50-P51.90 range.
“The local currency might open stronger…but may weaken in the afternoon ahead of stronger US non-farm payrolls data on Friday,” the second trader noted. — Karl Angelo N. Vidal with Reuters
