THE PESO strengthened against the dollar on Thursday, returning to the P51 level, as the sovereign credit rating upgrade from S&P Global Ratings boosted investor appetite for the local currency.

The peso closed Thursday’s session at P51.87 versus the greenback, 23.5 centavos stronger than the P52.105-per-dollar finish on Tuesday.

The peso traded stronger the whole day, opening the session at P51.77 versus the dollar. It dropped to as low as P51.945, while its intraday high reached P51.74 against the US unit.

Trading volume slipped to $1.246 billion from the $1.404 billion that switched hands the previous session.

Traders interviewed yesterday attributed the peso’s strength to the debt rating upgrade from S&P.

On Tuesday, the debt watcher raised the country’s long-term sovereign credit rating to “BBB+” from “BBB,” two notches above the minimum investment grade.

A higher credit rating can enable the government and private companies in the country to borrow funds abroad at a cheaper cost.

The debt watcher took note above-average growth and strong external and fiscal position which have boosted the country’s economic profile.

“The peso opened significantly stronger, although it went higher intraday since the story was still a strong dollar overnight following the pronouncement of Fed (US Federal Reserve) Chair Jerome Powell,” a trader said in a phone interview.

The US central bank kept its rates steady at 2.25-2.5%, despite pressure from US President Donald Trump to ease policy rates to stimulate the economy.

“We have an economy where the expansion is continuing, growth is at a healthy level, the labor market is strong, we see job creation, we see wages moving up. Inflation is low, which gives us the ability to be patient,” Mr. Powell said.

The trader added that the US central bank’s statement was “more hawkish than expected,” as market participants awaited hints of a rate cut.

“Powell said they believe current policy stance is okay at the moment. They don’t see changes to come any time.”

For today, the trader expects the peso to move between P51.65 and P51.90, while another trader gave a P51.70-P52 range.

“The local currency might strengthen ahead of slightly weaker US non-farm payrolls report,” the second trader said in an e-mail. — Karl Angelo N. Vidal