THE PESO rallied against the greenback on Thursday to reach a new three-year high after data showing improved foreign portfolio investments as well as dovish signals from the US Federal Reserve.
The local unit finished trading at P49.15 per dollar on Thursday, appreciating by four centavos from its P49.19 close on Wednesday, data from the Bankers Association of the Philippines showed.
Its Thursday close is also its strongest since Nov. 11, 2016 when it closed at P48.95 per dollar, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
The peso opened the session at P49.115 per dollar. Its weakest showing was at P49.19 while its intraday best was at P49.07 against the greenback.
Dollars traded rose to $809.55 million yesterday from the $551.71 million on Wednesday.
Mr. Ricafort said the local unit gained “after better portfolio investments data for the month of June”.
Foreign portfolio investments — also called as “hot money” because of how easily they enter and leave the country — yielded a net outflow for the fourth straight month at $253.38 million in June, central bank data released on Thursday showed.
This is wider than the $36.03-million net outflow in the same month a year ago but is the smallest since December and since the start of the virus outbreak.
For the first six months of the year, hot money yielded a net outflow of $3.3 billion, wider than the net $721 million that left the country in same period last year.
Meanwhile, a trader attributed the local unit’s strength to improved sentiment after recent signals from the Fed.
“The peso strengthened anew as US Fed Chairman Jerome Powell affirmed prior market expectations about the US central bank’s dovish policy stance despite keeping its policy rates unchanged near above zero,” the trader said in an e-mail.
After announcing the Fed will keep interest rates near zero, Mr. Powell on Wednesday said the Fed will “do what we can, and for as long as it takes” to support the virus-stricken US economy, according to Reuters.
“We are not even thinking about raising rates. We are in this until we are well through it,” Mr. Powell said in a news conference. — L.W.T. Noble with Reuters