THE PESO strengthened further against the dollar on Monday on the back of equity flows and hawkish statements from the Bangko Sentral ng Pilipinas (BSP).
The peso closed trading at P53.22 to the dollar on Monday, 6.5 centavos stronger than its Friday close.
The peso strengthened immediately at the open to the P53.25 against the dollar. Its intraday high was at P53.19, while its low was P53.32.
Volume declined to $664.5 million from the $794.8 million that changed hands during the previous session.
A foreign exchange trader said the peso strengthened on the back of investor demand.
“Right now, there is some demand for the peso due to equity flow as well as the hawkish statement from the BSP.”
The central bank has been signalling another round of monetary policy tightening to temper inflation expectations.
On Friday, BSP Governor Nestor A. Espenilla, Jr. said that the monetary authority is “ready to follow through” on policy rate hikes in May and June to help bring inflation back to within its 2-4% inflation target range.
Meanwhile, the trader added: “I think the [upward] trend for the peso will continue as the dollar index is correcting downward.”
On Monday, the dollar index was little changed against a basket of six major currencies at 94.717 after declining slightly on Friday, Reuters reported.
“This week, we are expecting big data coming from the central banks in the US, UK and Japan. I think, more or less, market players are taking profit on the dollar,” the trader said.
Meanwhile, another trader attributed the strengthening of the peso to the “lower-than-expected” economic growth data coming out of the US.
“The peso strengthened as US gross domestic product growth data last Friday came out slightly weaker than market expectations, despite being the strongest in four years,” the trader said in an e-mail.
The US economy grew 4.1% in the second quarter, supported by increased consumer spending as well as a rush to ship exports to China ahead the imposition of tariffs.
On Tuesday, the traders are expecting the peso to strengthen, with one of them estimating a range of P53.10-P53.40.
“The peso is expected to continue gaining strength ahead of hawkish expectations from the Bank of Japan’s monetary policy meeting” which might temper the dollar’s safe-haven appeal, the second trader noted. — Karl Angelo N. Vidal

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