THE PESO strengthened against the greenback on Tuesday amid positive market sentiment on the back the gains in the local stock market.
The local unit closed at P48.565 per dollar on Tuesday, appreciating by 2.5 centavos from its Monday finish of P48.59 against the greenback.
The peso started the trading session at P48.58 per dollar. Its weakest showing was at P48.61 while its intraday best was logged at P48.50 versus the greenback.
Dollars traded increased to $856.94 million on Tuesday from $678.45 million on Monday.
The peso appreciated on Tuesday following three successive days of gains in the local stock market, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
The Philippine Stock Exchange Index (PSEi) gained 46.57 or 0.67% to close at 6,919.54 on Tuesday.
Meanwhile, a trader attributed the peso’s appreciation to risk-off sentiment following assurance from the US Federal Reserve regarding inflation.
“The peso strengthened after Richmond Fed President Thomas Barkin downplayed lingering market concerns on potential resurgence of inflation in his speech on Monday,” the trader said in an e-mail.
Mr. Barkin played down recent Treasury market volatility, in remarks that reinforce the message that the US central bank is not yet troubled by the increase in yields.
“I’m mostly concerned about the labor market,” Mr. Barkin said Monday in a Bloomberg Television interview with Michael McKee in answer to a question about turbulence in the bond market. “At these levels of interest rates, when I talk to businesses in my district, I do not hear any sense that people are dialing back their investment.”
Several Fed officials last week also characterized the bond market upheaval as reflecting economic optimism, with Fed Chair Jerome Powell saying higher yields were a “statement of confidence” in the outlook.
Fed officials have stressed that they will not preemptively raise rates nor would they be bothered by a one-time spike in inflation later this year as parts of the economy reopen.
For today, Mr. Ricafort expects the local unit to move within the P48.50 to P48.60 levels versus the dollar while the trader gave a forecast range of P48.45 to P48.65. — L.W.T. Noble with Bloomberg