THE PESO posted a slight recovery versus the dollar yesterday, with the sideways move driven by profit taking that lent some support to the local currency despite stronger bets of a rate hike in the United States.

The local unit closed at P51.05 against the greenback, up three centavos from Monday’s P51.08-per-dollar finish.

The peso opened weaker at P51.23 versus the dollar. It hit P51.26 as its intraday trough during the morning session. It eventually touched P51.04 as its best showing for the day before settling at the closing rate.

Traders interviewed yesterday said the currency initially traded weaker due to news of strong factory output in the US, with the dollar’s strength clipped later in the day as corporates cashed in.

“The peso initially depreciated due to better-than-expected US manufacturing data, but gained towards the end of the day due to profit taking,” one trader said.

US manufacturing activity posted a 60.8 reading in September, the highest recorded since May 2004 according to the Institute for Supply Management survey. A reading above 50 meant the sector was expanding.

The pickup in industrial output in the US bolstered bets that the economy could be on track with its recovery, which would allow the Federal Reserve to proceed with a third rate hike for the year by December.

A second trader added that profit taking – both locally and offshore – drove the exchange rate to post a slight improvement from the previous day.

“At P51.20, we saw increased flows coming in. Exporters also saw it as favorable rate to sell that coupled with profit taking, which drove the spot rate lower,” the trader said separately.

Dollars traded on Tuesday reached $792.8 million, lower than the $888 million which exchanged hands the previous day but higher than the usual range of $500-600 million.

The second trader said the above-average volume was due to strong market interest rather than a reflection of the central bank’s intervention during trading.

For today, the first trader expects the peso to trade within P50.90-P51, moving range-bound ahead of jobs data in the US as well as speeches from Fed officials, as market players look for fresh signals as to whether the December rate adjustment is certain.

The second trader sees a wider range at P50.95-P51.15, but noted that the peso may simply “consolidate” ahead of the release of key economic data. — Melissa Luz T. Lopez

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