THE PESO continued to recover on Wednesday on the market’s anticipations of a rate cut by the US Federal Reserve and amid stabilizing oil prices after Saudi reported progress in restoring its oil facility.
The local unit closed at P52.20 against the greenback on Wednesday, stronger by six centavos from its P52.26-per-dollar close on Tuesday.
The peso opened higher at P52.17 versus the dollar. It traded in a tight range, with its weakest point recorded at P52.26, while its strongest level was at P52.15 against the greenback.
Dollars traded on Wednesday thinned to $912 million against the $1.14 billion recorded on Tuesday.
One trader said the peso moved sideways as the market awaited the result of the Fed’s two-day policy review.
“Trading was quiet as people await tonight’s FOMC (Federal Open Market Committee) meeting,” the trader said on Wednesday.
“As the rate cut is most probably be a go, the market will closely monitor on the language and tone of Fed (US Federal Reserve) [Chairman Jerome] Powell. The market will pay attention to the direction after the cut, if there will be a further easing along the road of if this was just a mid-cycle adjustment,” the trader said.
Aside from the Fed policy meeting, a second trader said Saudi’s efforts to restore its facility also boosted the peso.
“We saw the peso has improved a little bit as oil prices stabilized. The [US-China] trade negotiations are also still a factor to consider as all these things are still up in the air,” the second trader said.
Oil prices cooled on Wednesday as Saudi Arabia said full oil production would be restored by month’s end while caution ahead of an expected US interest rate cut kept wider financial markets in tight ranges.
Brent crude futures dipped 0.26% to $64.38 a barrel, having conceded about 65% of their gains made after the weekend attack on Saudi Arabia’s oil facilities.
US West Texas Intermediate crude lost 0.5% to $59.06 per barrel, paring back around half of its gains after Saturday’s attack.
Saudi Energy Minister Prince Abdulaziz bin Salman on Tuesday sought to reassure markets, saying the kingdom would restore its lost oil production by month-end having recovered supplies to customers to the levels they were prior to weekend attacks.
A US official told Reuters on Tuesday the United States believes the attacks originated in southwestern Iran, an assessment that could further increase the rivalry between Tehran and Riyadh.
For today, the first trader sees the peso playing around P52.10-P52.50 against the dollar, while the second trader sees the local unit moving within the P52.00-P52.30 band. — L.W.T. Noble with Reuters