THE PESO rallied to its best close against the greenback in more than three years following the State of the Nation Address (SONA) of President Rodrigo R. Duterte, which outlined some measures to support economic recovery amid the pandemic.

The local unit closed at P49.19 per dollar on Tuesday, appreciating by six centavos from its P49.25 finish on Monday, data from the Bankers Association of the Philippines showed.

This is the peso’s strongest close since its P49.17-per-dollar finish on Nov. 15, 2016, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

The peso opened the session at P49.12 per dollar. Its weakest showing was at P49.28 while its strongest was at P49.12 against the greenback.

Dollars traded totaled $849.4 million on Tuesday, up from the $838.17 million logged on Monday.

The local unit rose after Mr. Duterte’s statement of support for some measures to help the country amid the crisis, said Mr. Ricafort.

“The peso exchange rate closed stronger after President Duterte’s SONA provided some reassurance especially on the continuation of various reform and economic recovery measures,” he said in a text message.

On Monday, Mr. Duterte asked lawmakers to pass the Bayanihan II bill which will give him special powers to deal with the pandemic and allocate P140 billion for the government’s crisis response.

He also sought the quick approval of the proposed Corporate Recovery and Tax Incentives for Enterprises Act which will bring down the corporate income tax to 25% from 30%.

A trader said the peso’s appreciation was on the back of risk-on sentiment as investors await new signals from the US Federal Reserve ahead of its next meeting.

“The peso continued to strengthen amid expectations of dovish guidance from the US Federal Reserve’s monetary policy decision later this week,” the trader said in an e-mail.

The Federal Open Market Committee is set to meet on July 30 to 31 and the market is expecting the body to keep rates near zero to support the US economy’s recovery from the crisis.

For today, Mr. Ricafort gave a forecast range of P49.10 to P49.30 per dollar while the trader expects the local unit to move within the P49.05 to P49.25 band. — L.W.T. Noble with Reuters