The peso strengthened past the P50 to the dollar level after the latest round of easing from the central bank and as market participants took profits ahead of the US inflation report.

The peso finished trading at P49.92 against the dollar, after closing at P50.00 Thursday, according to data from the Bankers Association of the Philippines.

Week-on-week, the currency was stronger than its P50.06 close on June 19.

The peso opened at P50, which was the session low. The high was P49.89.

Dollar volume fell to $738.2 million from $848.93 million Thursday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said markets factored in the latest easing from the Bangko Sentral ng Pilipinas (BSP).

“The peso exchange rate closed at its strongest in more than two weeks after the surprise cut in local policy rates, seen as a pre-emptive monetary easing that could further support economic recovery from the pandemic,” he said in a text message.

On Thursday, the Monetary Board slashed rates by 50 basis points (bps) in a surprise move that represented its fourth easing round this year. It was viewed as a bid to boost the economy as global recovery prospects dimmed. This brought the overnight reverse repurchase rate, lending and deposit facilities to record lows of 2.25%, 2.75%, and 1.75%, respectively starting Friday.

So far, the BSP has slashed rates by 175 bps this year in a bid to mitigate the impact of the pandemic.

A trader who asked not to be identified said the market was also anticipating US core inflation data due out late Friday.

“The peso appreciated from some profit-taking ahead of likely weaker US inflation reports,” he said in an e-mail.

Core inflation strips out volatile elements from the headline inflation indicator, which is the consumer price index (CPI), and is thought to better reflect long-term inflation trends at a time when spending patterns captured by the CPI have been distorted by lockdowns. — Luz Wendy T. Noble