Peso strengthens to one-year high
THE PESO closed at its best level in more than a year on Thursday as the US Federal Reserve cut rates and following weak US economic data.
The local unit finished trading at P50.74 against the greenback on Thursday, appreciating by 14 centavos from the P50.885-a-dollar close on Wednesday.
Week-on-week, the peso gained 50 centavos from its P51.24 finish on Oct. 24.
The peso opened the session at P50.88 versus the dollar, which was already its weakest point for the day. Its intraday best was at P50.715 versus the greenback.
Dollars traded on Thursday grew to $1.16 billion from $1.049 billion on Wednesday.
“The peso sharply appreciated after the Federal Reserve reduced US policy rates by 25 basis points for the third time this year, and following the release of weaker third quarter US GDP (gross domestic product) growth report,” a trader said in an email.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso’s close on Thursday is its strongest in more than a year.
“The peso again closed stronger versus the dollar, its strongest in more than 21 months (or since Jan. 19, 2018 when it closed at P50.72 after recent decline in the US dollar versus major global and Asian currencies in reaction to the Fed’s latest and widely expected 0.25 percentage point cut in its key short-term interest rates,” he said in a text message.
The US Federal Reserve on Wednesday cut interest rates for the third time this year to help sustain US growth despite a slowdown in other parts of the world, but signaled there would be no further reductions unless the economy takes a turn for the worse.
“We believe that monetary policy is in a good place,” Fed Chair Jerome Powell said in a news conference after the U.S. central bank announced its decision to cut its key overnight lending rate by a quarter of a percentage point to a target range of between 1.50% and 1.75%.
Meanwhile, US GDP expanded by 1.9% in the third quarter, slowing down from the 2% growth pace in the April to June period.
The third-quarter growth marked a further slowdown from the brisk 3.1% rate notched in the first three months of the year. The dollar fell against a basket of currencies, while US Treasury prices rose. Stocks on Wall Street were trading higher. — L.W.T. Noble with Reuters
