THE PESO strengthened further on Wednesday to log a fresh one-month high, even as the dollar climbed on the back of a rebound in global equity markets.
The local unit closed the session at P53.89 versus the greenback on Wednesday, seven centavos stronger than the P53.96-per-dollar finish the previous day.
This was peso’s best showing in more than a month or since it closed at P53.88 against the dollar last Sept. 10.
It traded stronger the whole day, opening the session at P53.87 versus the dollar. It climbed to as high as P53.84 per greenback, while its worst showing stood at P53.95.
Dollars traded rose to $872.95 million from the $777.8 that switched hands last Tuesday.
A foreign exchange trader said the peso rose on the back of an “equity bounce from world equity index.”
“At the same time, the dollar traded stronger as risk-on sentiment was seen overnight,” the trader added.
The dollar strengthened against the major currencies on Wednesday as the three main Wall Street indexes each rose by more than 2% as blue-chip firms delivered strong earnings, reducing global appetites for safe haven assets, Reuters reported.
Michael L. Ricafort, economist at Rizal Commercial Banking Corp., concurred, adding that “relatively bigger gains” in the local stock market as well as hawkish signals from the central bank pushed the peso stronger.
The Philippine Stock Exchange index gained 112.66 points or 1.61% to finish Wednesday’s session at 7,099.68.
“The peso continued to strengthen…amid recent signals that the [Bangko Sentral ng Pilipinas] could possibly keep policy rates unchanged for the rest of 2018 amid some easing inflation especially on a month-on-month basis,” Mr. Ricafort said in a text message.
Meanwhile, another trader attributed the peso’s continued strength to “cautious” profit-taking following the recent strength of the local currency.
“The absence of major geopolitical noise in the recent days eased some safe-haven pressures on the dollar,” the trader said.
For Thursday, the first trader expects the peso to move between P53.85 and P54.05 against the dollar, while the other gave a P53.80-P54 range. — Karl Angelo N. Vidal with Reuters