THE PESO strengthened against the greenback on Friday after the central bank cut policy rates amid easing inflation expectations.

The local currency strengthened by 18 centavos to close at P52.12 against the dollar on Friday from P52.30 a day before.

The peso was stronger the entire session, opening slightly higher at P52.225 versus the dollar. It slipped to as low as P52.27 intraday, while its best showing was at P52.085 against the greenback.

Trading volume declined to $1.002 billion from the $1.038 billion that exchanged hands the previous day.

Michael L. Ricafort, economist at the Rizal Commercial Banking Corp. (RCBC), said in a text message that the peso strengthened “after the latest monetary easing by way of a 25 basis points cut in policy rates amid sustained easing trend in inflation.”

The BSP’s policy-setting Monetary Board reduced key rates by 25 basis points on Thursday on the back of a “manageable” inflation outlook. Officials said a possible cut in big banks’ reserve requirements will be discussed in the policy-setting body’s meeting next week.

Likely faster economic growth following the 2019 budget’s passage, as well as the continuing trade talks between US and China, resulted in improved risk appetite that supported the peso, Mr. Ricafort added.

The successful euro bond sale of the government, through which it raised €750 million via eight-year global bonds, well above its initial offer of €500 million due to oversubscription, also improved sentiment, he added.

Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., also attributed the peso’s strengthening to the Bangko Sentral ng Pilipinas’ move to loosen its policy.

“Generally, the BSP cut is a sign that the economy has potential to go higher than it has,” Mr. Asuncion said. — R.J.N. Ignacio