THE PESO ended stronger against the greenback on Thursday as global equities and the local stock market continued to recover.
The local currency gained 14 centavos to close at P50.78 versus dollar on Thursday from the P50.92-per-dollar close on Wednesday.
The local unit opened the session slightly weaker at P50.82 against the greenback. Its lowest point for the day was at P50.83, while its strongest showing was at P50.73 per dollar.
Total dollars traded yesterday slightly declined to $917.8 million from the previous day’s $930.6 million.
A trader from a local bank interviewed said the recovery in the equity market, both local and globally, indicated a “risk-on” signal for investors, causing the peso to strengthen against the dollar.
“[The peso strengthened] mainly due to a bit of a risk on sentiment given some rally in US equities, actually global equities rallied yesterday (Wednesday) and even now, our equity market rallied by 2%,” the trader said over telephone.
Meanwhile, the second trader attributed the gains to “optimism over prospects to curing the [novel] coronavirus and reduced market uncertainty after [US President Donald J.] Trump was acquitted by the US Senate earlier today.”
Local shares went up on Thursday along with the rest of global equities after taking a slump due to concerns on the novel coronavirus outbreak.
The benchmark Philippine Stock Exchange index went up by 2.09% to close at 7,506.51 on Thursday, along with the Wall Street, as well as stocks in Asia.
Meanwhile, Reuters reported that the US Senate acquitted Mr. Trump on both impeachment charges after enough US senators, 34 as of reporting, voted that he is not guilty of abusing powers.
The votes fell short of the two-thirds majority vote needed out of 100, to convict Mr. Trump and remove him from presidency.
Back home, after the market’s close, the Monetary Board said they trimmed benchmark policy rates by 25 basis points (bps), which brought the overnight reverse repurchase, overnight deposit and lending down to 3.75%, 3.25% and 4.25%, respectively.
“We saw some dollar-peso selling even though the BSP cut rates by 25 bps just now, I think it was already priced in eh that’s why despite the cuts, we see the rates a bit trading lower offshore or after market,” the trader said.
As the market reacts to the policy rate cut, the second trader said the local unit may weaken on Friday.
In a BusinessWorld poll last week, 10 out of 13 analysts projected the BSP MB will cut key policy rates by 25 bps.
For Friday, the first trader gave a P50.60-P50.80 per dollar forecast range while the second trader said the peso may trade within the P50.75-50.95 per dollar band. — Beatrice M. Laforga