Peso returns to P56:$1 level as market awaits Fed meet minutes
THE PESO climbed to return to the P56-per-dollar level versus the greenback on Wednesday ahead of the release of the minutes of the US Federal Reserve’s latest policy meeting, which could provide hints on its next move.
The local unit closed at P56.94 per dollar on Wednesday, surging by 43.5 centavos from its Tuesday finish of P57.375, Bankers’ Association of the Philippines data showed.
This is the peso’s strongest close in over two months and the first time it ended at the P56 level since its P56.77-a-dollar finish on Sept. 13.
The peso opened Wednesday’s session stronger at P57.25 against the dollar. Its weakest showing was at P57.33, while its intraday best was at its close of P56.94 versus the greenback.
Dollars exchanged inched up to $688.85 million on Wednesday from $684.4 million on Tuesday.
“The peso appreciated amid less hawkish market expectations ahead of the Federal Reserve policy minutes release overnight,” a trader said in an e-mail.
The local currency also strengthened on recent comments from Fed officials that indicated openness to slower rate hikes moving forward, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The US central bank raised borrowing costs by 75 basis points (bps) for a fourth straight time this month, bringing the fed funds rate to a 3.75-4% range. It has hiked rates by 375 bps since March amid elevated inflation and is expected to deliver smaller increases as early as its Dec. 13-14 meeting.
US consumer inflation rose to 7.7% year-on-year in October, slower than the 8.2% print in September, raising expectations of less aggressive tightening.
The peso was also supported by positive sentiment after the Philippine president denied rumors of a shakeup in his economic team, Mr. Ricafort said.
President Ferdinand R. Marcos, Jr. dismissed as “fake news” reports that Finance Secretary Benjamin E. Diokno will leave his post.
For Thursday, the trader said the peso may continue to strengthen on a potentially weaker US durable goods report.
The trader gave a forecast range of P56.80 to P57.05 on Thursday, while Mr. Ricafort expects the local unit to move within P56.85 to P57.15 per dollar. — K.B. Ta-asan
