Peso appreciates vs dollar due to Fed easing bets
THE PHILIPPINE PESO continued to strengthen against the dollar on Thursday, propped up by a US Federal Reserve official’s remark that the US central bank could start its easing cycle this year.
It closed at P55.911 a dollar, 3.9 centavos stronger from its close on Wednesday, Bankers Association of the Philippines data showed.
The peso opened at P55.98 against the dollar, appreciated to as much as P55.85 and weakened to as much as P56. Dollars exchanged fell to $1.2 billion from $1.29 billion.
The peso was boosted by remarks by Federal Reserve Bank of Cleveland President Loretta J. Mester, renewing hopes about the Fed’s easing cycle, Robert Dan J. Roces, chief economist at Security Bank Corp., said in a Viber message.
Ms. Mester said on Tuesday said the US economy performing as she expected could open the door to rate cuts. But she was not ready yet to say when due to inflation uncertainty, Reuters reported.
The Federal Open Market Committee held its target rate steady at 5.25-5.5% for a fourth straight time at its meeting last week. It raised borrowing costs by 525 basis points from March 2022 to July 2023.
The peso also strengthened against the dollar due to a “mini sell-off” before the long weekend, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said in a Viber message.
“After opening relatively flat at P55.98, the peso spent much of the morning session simply trading sideways from P55.90-P55.95,” he said. “In afternoon trading, flows ahead of the long weekend were seen, which prompted a mini sell-off.”
Financial markets will be closed on Friday for the Chinese New Year. — Aaron Michael C. Sy
