THE PESO strengthened to hit three-week high against the dollar on Wednesday as the market continued to wait for the central bank’s policy decision amid hints on a fresh hike.
The peso ended at P53.37 versus the greenback, five centavos stronger than the P53.42-per-dollar finish on Tuesday.
This was the peso’s best showing in three weeks or since it closed at P53.36 against the dollar on July 4.
Dollars traded declined to $557.1 million from the $668.1 million that switched hands on Tuesday.
A foreign exchange trader said the peso gained versus the US currency on Wednesday amid two-way flows from investors.
“We are still seeing two-way flows. There’s still demand to buy dollars from oil companies and importers, the trader said in a phone interview, adding that there are also sellers that came out. “I think that’s why we’re seeing stronger against the dollar recently.”
The trader also noted that the market is still waiting for the next inflation figure as well as the monetary policy decision of the Bangko Sentral ng Pilipinas (BSP) at their August meeting.
“The expectation for the BSP is to hike interest rates. The question now is will they hike 25 basis points or 50 basis points.”
On Friday, the monetary authority said it is considering another hike in benchmark rates to temper inflation expectations.
The monetary authority has already raised rates twice this year. Rates now stand at a 3-4% range.
Meanwhile, another trader said the peso appreciated “ahead of possible hawkish cues from the European Central Bank policy meeting which would be less favorable to the dollar.”
For Thursday, the first trader expects the peso to move between P53.35 and P53.55, while the other sees the local unit to trade within a P53.25-P53.45 range. — K.A.N. Vidal