THE PESO strengthened against the greenback on Monday as the central bank chief signaled rates are likely to be maintained in the upcoming policy-setting meeting.

The local unit closed at P49.01 per dollar, appreciating by 3.10 centavos from its P49.041 finish on Friday, data from the Bankers Association of the Philippines showed.

Monday’s close is its strongest in more than three years or since it finished at P48.95 per dollar on Nov. 11, 2016.

The peso opened Monday’s session at P49.05 per dollar. Its weakest was at P49.06 while its strongest showing was at its close of P49.01 against the greenback.

Dollars exchanged dropped to $409.3 million on Monday from the $647.4 million logged on Friday.

The peso gained after Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said they do not need to raise rates at the moment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

This comes ahead of the Aug. 20 policy-setting meeting of the Monetary Board.

“Signals of no local policy rate cuts supported the peso,” Mr. Ricafort said in a text message.

Mr. Diokno said in a television interview on Monday there is “no compelling reason” to slash rates further following the 175 basis points in cuts so far this year.

“I don’t see a strong reason why we should have another policy cut,” Mr. Diokno said.

Rates on the BSP’s overnight reverse repurchase, lending, and deposit facilities are at record lows of 2.25%, 2.75%, and 1.75%, respectively.

Meanwhile, a trader said the peso strengthened on expectations of a continued rise in the country’s dollar reserves.

Gross international reserves stood at a record $93.32 billion at end-June, rising by a tenth from a year ago and by $30.5 million from its May level, BSP data showed. This has already surpassed the central bank’s $90-billion projection for the year.

For today, the trader expects the local unit to move between the P49 to P49.20 levels against the dollar while Mr. Ricafort gave a forecast range of P48.95 to P49.10. — L.W.T. Noble