THE PESO strengthened to a one-month high against the dollar on Wednesday on stronger bets of “dovish” US Federal Reserve policy minutes.
The peso ended Wednesday’s session at P52.06 versus the greenback, 15 centavos stronger than the P52.21-per-dollar finish last Tuesday.
This was the peso’s best showing in more than a month or since it ended at P52.03 versus the dollar last Jan. 15.
The local unit traded stronger the whole day, opening the session at P52.14 versus the dollar. It dropped to as low as P52.15 intraday, while its best showing stood at P52.03 versus the US currency.
Trading volume slipped to $873.34 million from the $885.6 million that switched hands in the previous session.
A foreign exchange trader saw quiet trading in the morning session before banks pushed the peso stronger in the afternoon.
“In the morning, the peso only traded between P52.10 and P52.15. We saw a quiet market in the morning session, but during the afternoon, we saw active selling among all banks, which they wanted to push the dollar-peso lower,” the trader said in a phone interview.
Meanwhile, another trader said in an e-mail that the local unit strengthened further as “dovish bets on the January Fed minutes heightened” following comments from Cleveland Federal Reserve President Loretta Mester.
“I would think that we probably have to raise interest rates a little bit later this year,” Ms. Mester told reporters in Newark, Delaware.
Ms. Mester said her view was that the Fed could also end its process of trimming its bond holdings by the end of this year.
The second trader said Ms. Mester’s speech supported a similar comment made by Fed Chair Jerome Powell in the January meeting of the central bank.
The Fed will release on Feb. 20 the minutes of its Jan. 29-30 meeting, where it kept its borrowing costs steady between 2.25% and 2.5%.
Meanwhile, the other trader said there might have been intervention from the Bangko Sentral ng Pilipinas (BSP) yesterday as agent banks tried to buy dollars before the market closed.
As the country’s monetary authority, the BSP sometimes conducts “tactical interventions” to temper any sharp swings that may cause the peso to appreciate or depreciate.
For today, the first trader expects the peso to trade between P51.90 and P52.20 versus the dollar, while the other gave a P51.95-P52.15 range. — K.A.N. Vidal with Reuters

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