THE PESO rebounded against the dollar on Wednesday as remarks from newly appointed Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno quelled market uncertainties.
The local unit ended Wednesday’s session at P52.165 versus the greenback, 7.5 centavos stronger than the P52.24-per-dollar finish on Tuesday.
The peso opened the session weaker at P52.28 per dollar, slumping to as low as P52.41 intraday. However, it bounced back in the afternoon session, with its best showing at P52.15 against the greenback.
Dollars traded thinned to $1.31 billion from the $1.483 billion that switched hands the previous day.
A foreign exchange trader said the peso slid to its intraday trough in the morning session after the dollar strengthened against a basket of currencies overnight.
“The dollar was stronger overnight across all currencies. There was positive US data: new home sales and ISM (Institute for Supply Management) manufacturing data. It came better than expected, so that drove the dollar higher,” the trader said in a phone interview.
However, the peso bounced back in the latter part of the trading day as the market reacted to the comments from Mr. Diokno about cutting banks’ reserve requirement ratio (RRR). Big banks’ RRR stands at 18%, one of the highest in the region.
“The peso rebounded from its heavy fall yesterday after incoming BSP Governor Diokno said that he intended to ‘accelerate’ the reduction in the reserve requirement ratio, which was received positively by market players today,” another trader said in an e-mail on Wednesday.
At the sidelines of his weekly press conference, Mr. Diokno said the central bank will review the reduction in RRR as a continuation of the late BSP Governor Nestor A. Espenilla, Jr.’s policy.
“We can expedite the…reduction in the reserve requirement… Mataas talaga iyon (that’s high),” Mr. Diokno told reporters yesterday.
“There’s news that came out that our new BSP Governor wanted to accelerate reserve ratio cut. That means that the peso was about to go stronger with that statement,” the first trader said, adding that the statement somehow eased uncertainties in the market.
For today, the first trader expects the peso to trade between P52.10 and P52.45, while the other gave a P52-P52.30 range. — Karl Angelo N. Vidal