THE PESO strengthened versus the dollar on Friday, buoyed by hawkish comments from a central bank official and offshore inflows ahead of the sale of retail Treasury bonds next week.
The local unit ended the week at P52.065 against the greenback, stronger by 6.5 centavos from Thursday’s P52.13 finish. This is the best showing of the peso since Wednesday, when it closed at P52.06.
The currency initially traded weaker as it opened at P52.24 and even touched P52.25 as its intraday low. The peso went on to gain strength later in the day, logging P52.04 as its best showing before settling at the closing rate.
Two traders interviewed by phone said the peso received a boost from a hawkish comment by Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo.
“The peso traded higher initially due to a strong dollar overnight. It was offered down during the onshore trading and collapsed in the afternoon following statements by BSP’s Guinigundo that they are still on a hawkish stance,” one trader said.
The central bank official told Bloomberg that the BSP remains “more on the hawkish side” on monetary policy. Mr. Guinigundo said in an interview in Osaka, Japan that authorities “choose to be more cautious” in terms of setting interest rates, as they have not reversed the cumulative 175 basis point increase in key rates which took effect in 2018.
Another trader also pointed out that market players are likely taking positions ahead of the three-day weekend. Financial markets will be closed on Monday in observance of the People Power Anniversary.
“The peso was pretty much well-offered because of the long weekend. Players are getting ready for possible remittances,” the second trader noted, adding that there possible inflows due to offshore buying into the retail bonds offered by the Bureau of the Treasury also came into play.
Dollars traded on Friday reached $961.87 million, down from the $1.234 billion that exchanged hands the previous day.
The government revealed plans to raise at least P30 billion through the offer of five-year retail Treasury bonds, which is will be opened to both individual and institutional investors from Feb. 26 to March 8.
The first trader also noted that they saw the BSP buying some units as the below the P52.10 mark, which is seen to be a fresh attempt to rebuild its dollar reserves. — Melissa Luz T. Lopez