Peso inches higher as market eyes BSP meet

THE PESO strengthened further against the dollar on Wednesday as the market pocketed gains ahead of an expected tightening by the local central bank this month.
The peso closed Wednesday’s session at P53.08 versus the greenback, a centavo and a half stronger than the P53.095-per-dollar finish on Tuesday.
The peso opened the session stronger at its intraday high of P53.05 versus the dollar. Meanwhile, its worst showing for the day was at P53.15 against the US currency.
Dollars traded declined to $642.13 million yesterday from the $670.81 million that switched hands on Tuesday.
In a text message, an economist said the peso moved sideways with an upward bias on Wednesday.
“This probably was due to the considerable profit taking as the market expects a rate hike in the coming week,” Ruben Carlo O. Asuncion, UnionBank of the Philippines chief economist said in a text message.
The Bangko Sentral ng Pilipinas (BSP) has been hinting at another interest rate hike during its monetary policy meeting on Aug. 9.
Last month, BSP Governor Nestor A. Espenilla, Jr. said the monetary authority is ready to follow through the two tightening moves it has implemented this year to temper inflation expectations.
“The peso appreciated as market players remained optimistic on a possible BSP rate hike next week despite general strengthening of the dollar across major currencies ahead of likely hawkish guidance from the US Federal Reserve [on Thursday],” a foreign currency trader said in an e-mail.
Meanwhile, another trader said the pair traded within a very tight range as the dollar index moved sideways.
“The peso traded [up] since we saw offshore market selling near the close…” the second trader said.
For Thursday, Mr. Asuncion said the peso may play within P53 to P53.20 against the dollar while the first trader sees the pair trading between P52.95 and P53.15. The second trader said the local currency may move within P52.95 to P53.20 per dollar.
Meanwhile, most Asian currencies took to the sidelines on Wednesday, with China’s yuan choppy amid media reports that US plans to raise tariffs on $200 billion of Chinese goods. — KANV with Reuters