Home Banking & Finance Peso recovers to log fresh one-month high
Peso recovers to log fresh one-month high
THE PESO recovered on Friday to its strongest rate in over a month, supported by cues for succeeding rate hikes from the central bank coupled with big fund inflows.
The local unit closed the week at P53.70 versus the dollar, 26.5 centavos stronger than the P53.965 close on Thursday. This also marked the peso’s best showing since a P53.55 finish on Sept. 5.
The unit initially traded weaker as it opened at P54.02 against the greenback and even touched P54.04 as its weakest showing during the session. The peso eventually rebounded as trading proceeded and closed at its strongest rate.
One trader attributed the appreciation of the currency to fresh hints from the Bangko Sentral ng Pilipinas (BSP) that future interest rate increases may still be on the table.
“The peso appreciated strongly today following hawkish cues from the BSP third quarter inflation report this morning,” one trader said on Friday. “In particular, the central bank signalled that headline inflation for 2019 might breach above the government’s 2-4% target range which could warrant further rate hikes next year.”
The trader was referring to statements from BSP officer-in-charge Deputy Governor Maria Almasara Cyd N. Tuaño-Amador, who noted that sound monetary policy action “continues to be directed towards safeguarding the medium-term inflation target” for 2019, which some took as a hint that there could be additional rate hikes on top of the 150 basis points (bp) which the central bank introduced so far this year.
Another trader said the peso also received a boost from inflows due to remittances from abroad, as well as investments likely meant for the follow-on offering of shares by the San Miguel Food and Beverage, Inc. (SMFB).
“Compared to other currencies, the excessive move was seen only in our (dollar-peso) pair. It’s more of an inflow from remittances and the Purefoods follow-on offering,” the trader said by phone.
The share sale will be priced at P85-95 apiece, according to San Miguel Corp. president and chief operating officer Ramon S. Ang, the parent firm of SMFB. The Securities and Exchange Commission approved the share sale earlier this month, which is slated to be the biggest so far in the local equities market.
Dollars traded on Friday reached $905.02 million, surging from the $729.25 million which exchanged hands the previous day and well above the daily average. — Melissa Luz T. Lopez