THE PESO is seen to move sideways against the dollar this week ahead of the monetary policy meetings of the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.
On Friday, the local currency strengthened to close at P51.93 versus the dollar, 10 centavos stronger than the P52.03 logged the previous day, as the US currency weakened due to continued rhetoric from the White House on the imposition of tariffs.
Week on week, the peso also gained from the P52.03-per-dollar finish on March 9.
Guian Angelo S. Dumalagan, market economist of Land Bank of the Philippines (LANDBANK) said the dollar may strengthen against the peso this week on the back of “widespread expectations of another 25-[basis points] rate hike from the US Federal Reserve on March 22,” adding that the pair might trade sideways prior to the meeting.
The Fed is seen to hike interest rates on Wednesday, the first time for the US central bank this year. Markets are also watching out for statements on the Fed’s policy direction to gauge if the monetary authority will stick to its forecast of three rate hikes this year or raise it to four.
The dollar’s projected appreciation might just be minimal should the Fed opt to keep its monetary stance steady this week, Mr. Dumalagan noted, as investors could remain cautious ahead of the BSP monetary policy meeting.
“Prior to the policy meetings of the BSP and the [Fed], some investors might also refuse to take large bets in order to limit their exposure should there be any unexpected policy moves,” LANDBANK’s Mr. Dumalagan noted, saying that this, together with mixed signals abroad, will prompt the dollar to move sideways with an upward bias.
Meanwhile, Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said he expects the peso to strengthen this week.
“I see a stronger peso [this] week,” Mr. Asuncion said. “I expect the US Fed and the BSP policy meetings to be major drivers but it seems the market has already factored the expectations in: Fed hikes [its interest rates] and BSP stays.”
For this week, Mr. Asuncion sees the peso trading between P51.70 and P51.90, while LANDBANK’s Mr. Dumalagan gave a wider forecast range of P51.60 to P52.30.
Mr. Dumalagan said this could be reversed by surprises from the Fed and BSP and further escalation of concerns over US tariffs, among others. — K.A.N. Vidal
