THE PESO rallied against the greenback on Wednesday on the back of continued growth in the country’s dollar reserves.

The local unit finished trading at P49.48 per dollar, gaining six centavos from its P49.54 close on Tuesday, data from the Bankers Association of the Philippines showed.

The peso started the session at P49.45 against the greenback. Its weakest showing was at P49.495 while its strongest was at P49.425 versus the dollar.

Dollars traded dropped to $563.8 million yesterday from the $793.7 million seen on Tuesday.

The peso’s gain was on the back of the continued increase in the gross international reserves (GIR), said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. “The peso closed stronger after record-high GIR data, which fundamentally provides greater structural support for the exchange rate.”

Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed the country’s GIR was at $93.318 billion at end-June, higher by 9.88% from the $84.931 billion seen a year ago and the $93.288 billion level logged at end-May.

“The month-on-month increase in the GIR level reflected inflows mainly from the National Government’s foreign currency deposits with the BSP,” the central bank said.

Meanwhile, a trader attributed the local unit’s appreciation to market sentiment on US inflation data.

“The peso strengthened as US core inflation for June 2020 remained subdued, which indicated sustained weak price pressures in the US,” the trader said in an e-mail.

The US Labor department on Tuesday reported headline inflation inched up by 0.6% last month, the steepest gain since August 2012 after the 0.1% uptick in May, on the back of higher gasoline prices, according to Reuters.

Meanwhile, core inflation, which excludes volatile food and energy components, rose 0.2% in June after dipping by 0.1% in May.

For today, Mr. Ricafort gave a forecast range of P49.35 to P49.55 per dollar while the trader expects the peso to move within the P49.40 to P49.60 band. — L.W.T. Noble