THE peso strengthened against the dollar on Friday on positive market sentiment after the Philippine central bank cut benchmark interest rates by 25 basis points.
The local currency closed at P51.875 a dollar, 23.5 centavos stronger than a day earlier.
The peso opened at P52.15 and weakened to as much as P52.18 against the dollar. It reached an intraday best of P51.86.
Dollars traded rose to $1.21 billion from $1.15 billion on Thursday.
Atrader traced the stronger peso to positive sentiment arising from the latest round of policy rate cuts.
“The peso was stronger on the back of good economic prospects, with the Monetary Board cutting policy rates further,” he said. “Even though they did not cut the reverse repurchase rate, players expect there will be positive spillover from the Bangko Sentral ng Pilipinas’ (BSP) recent action,” he added.
Another trader said the peso was just tracking other Asian currencies against the dollar. “We are seeing that the flows are favoring the peso right now.”
The central bank on Thursday cut interest rates for the third time this year by another 25 basis points, bringing the overnight reverse repurchase rate to 4% and the overnight deposit and lending rates to 3.5% and 4.5% respectively.
The board left lenders’ reserve ratio requirement untouched at 16% for big banks, 6% for thrift banks and 4% for rural and cooperative banks. — Luz Wendy T. Noble