THE PESO gained strength versus the dollar on Friday, with hawkish remarks from the Bangko Sentral ng Pilipinas (BSP) boosting the currency to a one-month high.
The local unit closed at P53.285 against the greenback, 16 centavos stronger than its P53.435 finish on Thursday.
The peso initially traded weaker at P53.50, which also happened to be its intraday low. It improved during the session and even touched P53.28 as its best showing before settling at the closing rate.
Friday’s rate is the strongest since the P53.28-per-dollar close recorded on June 22.
Market players likely grew more upbeat towards the peso following a hawkish statement from BSP Governor Nestor A. Espenilla, Jr. on monetary policy.
“Central banks from emerging markets and Asia have made announcements about preemptive actions… in anticipation of trade tensions. We’ve been seeing that lately — even the BSP said they will more aggressive,” one trader said in a phone interview.
“Everyone’s proactive now, and that’s giving a little bit of a boost to Asian currencies and weakness to the dollar.”
Mr. Espenilla has said the central bank is already considering a “strong follow-through” policy adjustment during their Aug. 9 rate-setting meeting, and will also pause from reducing bank reserves this year and wait until inflation returns to target by 2019.
“That statement probably had an effect that meant BSP is really serious in containing inflation,” the trader added.
On top of the “more hawkish” cues from the central bank, another trader attributed the peso appreciation to heavy selling offshore as well as inflows from the equity market.
She added that market players are still awaiting for cues on the second-quarter economic growth in the United States, which will be released Friday night Manila time.
Dollars traded on Friday reached $794.8 million, bigger than the $625.4 million which exchanged hands the previous day. Both traders said that the higher amount was likely due to strong demand for trades rather than an intervention from the central bank. — Melissa Luz T. Lopez