THE PESO picked up versus the dollar for the second straight session yesterday to its best showing in over a week, benefiting from risk-on sentiment ahead of market-moving developments in the United States.
The local unit closed at P50.915 against the greenback on Tuesday, shaving 18.5 centavos from a P51.10 finish on Monday as it recovered late in the session.
The peso opened weaker at P51.15 against the greenback and hit P51.16 as its intraday low. However, it pared its losses and even touched P50.91 as its best showing before settling at the closing rate.
Two traders said the peso defied a general downtrend seen in other currencies versus the dollar, with the local unit gaining strength for the second straight session.
“The dollar-peso drove lower yesterday. This might be due to the risk-on environment ahead of the FOMC (Federal Open Market Committee) meeting, although it’s actually strange because dollar-Asia is not moving lower. This is just a peso move,” one trader said in a phone interview.
“This might be because the PSEi is reaching new highs. It went down from the highs [yesterday], but still stood above 8,000.”
The Fed was set to start its two-day monetary policy review later on Tuesday, which will soon be followed by the rate-setting meeting of the Bangko Sentral ng Pilipinas (BSP) on Thursday.
Ahead of these key decisions, market players are also closely watching US President Donald J. Trump’s speech before the United Nations (UN) late Tuesday, as any statement from the Republican leader could shake up tensions between his country and North Korea after a recent spate of missile launches from Pyongyang.
Back home, the bellwether Philippine Stock Exchange index snapped its three-day rally, closing at 8,162.70 after closing at 8,294.14 on Monday.
On the other hand, a second trader said some fund inflows may have also supported a stronger peso, as this bolstered demand for the local currency.
“There were inflows that came in. Also, I think market players took long positions before Trump’s speech. There’s a wait and see,” the trader added, noting that the BSP may have also intervened during the session to manage the currency’s movement later that day.
Dollars traded yesterday hit $740.2 million, rising from the $502.9 million that exchanged hands the previous day.
For Wednesday, the first trader said the peso may trade within P50.75-P51.10, noting that the peso could strengthen further with continued risk appetite towards emerging markets.
Meanwhile, the second trader expects a P50.90-P51.15 range for today, with trading to be influenced by Mr. Trump’s speech before the 193-member global body of the UN. — Melissa Luz T. Lopez