THE PESO strengthened further against the dollar on Friday to hit a one-year high after the central bank kept interest rates unchanged.
The local unit ended the week at P51.57 versus the greenback, 7.5 centavos stronger than the P51.645-per-dollar finish on Thursday.
This was the peso’s best showing in more than a year or since it closed at P51.48 against the dollar last Feb. 9, 2018.
The peso opened the session stronger at P51.40 against the US currency. It climbed to a high of P51.395 per dollar, while its intraday low was its closing rate.
Dollars traded surged to $1.17 billion from the $829.16 million that changed hands the previous session.
Traders said the peso surged against the dollar after the Bangko Sentral ng Pilipinas (BSP) kept interest rates unchanged at its meeting on Thursday.
“We saw heavy selling in the morning session…on the back of the MB (Monetary Board) not decreasing rates [on Thursday], which triggered heavy selling of the dollar-peso overnight,” a trader said in a phone interview.
The BSP rates unchanged on expectations of steady inflation and economic growth, and as it monitors the impact of recent monetary adjustments.
At its meeting last May 9, the MB trimmed key rates by 25 basis points. Last month, the BSP also announced the phased reduction of lenders’ reserve requirement ratios to 16% for universal and commercial banks, 6% for thrift banks and 4% for rural and cooperative banks.
“The peso strengthened today after the BSP decided to keep its policy rates steady despite some earlier market expectations of a BSP policy rate cut,” another trader said on Friday.
The first trader added that the dollar recovered in the afternoon session as market participants took profits, closing the session at the local unit’s intraday low. — K.A.N. Vidal