THE peso continued its ascent against the dollar on Friday as market participants reacted to further monetary tightening by the central bank.
The peso ended the week at P52.715 against the dollar on Friday, up from the P52.805 finish yesterday.
The peso was stronger the whole day, opening the session at P52.65. It hit a high of P52.625, while the low was P52.74.
Trading volume slipped to $756.6 million from $799.3 million the previous day.
“The peso continued to improve as a reaction to the BSP (Bangko Sentral ng Pilipinas) action yesterday,” a foreign exchange trader said in a phone interview Friday.
The Monetary Board raised policy rates by 25 basis points (bp) yesterday, marking the fifth consecutive tightening move this year, as it saw the need for preemptive action amid global uncertainty.
Benchmark rates now range from 4.25-5.25%, with the key policy rate now at 4.75%, the highest since March 2009.
“Probably they still expect higher inflation in the coming months, and probably that is the reason why they hiked once again,” the trader said.
He added that some analysts are still expecting the monetary authority to raise rates again by the first quarter of the year.
Meanwhile, another trader said the 25bp rate hike helped boost sentiment in the peso.
“The proactive nature of the decision yesterday boosted market sentiment in the peso,” the trader said in an e-mail. — Karl Angelo N. Vidal