Peso drops ahead of BSP

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THE PESO weakened a tad against the dollar on Thursday as investors awaited the result of the central bank’s policy meeting.

The local unit ended yesterday’s session at P52.24 versus the greenback, slightly weaker than the P52.235-per-dollar finish last Wednesday.

The peso opened the session weaker at P52.30 against the dollar and slipped to as low as P52.365 intraday. Meanwhile, its best showing stood at P52.20 versus the US currency.

Dollars traded climbed to $1.269 billion from the $746.4 million that switched hands the previous day.

A foreign exchange trader said the peso initially traded weaker amid huge demand for the dollar.

“I would say it consolidated throughout the day, although the peso traded significantly [higher] to close almost the same level where it closed [on Wednesday],” the trader said in a phone interview.

The trader added that the local unit consolidated ahead the policy decision of the Bangko Sentral ng Pilipinas (BSP).

As expected, the central bank kept its interest rates steady during the meeting of its policy-setting Monetary Board yesterday amid expectations of a “more manageable” inflation environment.

Inflation in January stood at 4.4%, marking the third straight month of deceleration from the 6.7% print recorded in September and October, as food, transport and utility prices grew at a slower pace.

“If we go by the pronouncements of the BSP, it’s still supportive of the peso,” the trader added.

Another trader said in an e-mail that the local unit closed relatively sideways on uncertainty ahead of the rate decision, which was released after the trading session.

For today, the first trader expects the peso to trade between P52.15 and P52.45 versus the dollar, while the other gave a slimmer P52.10-P52.30 range.

“The peso might appreciate [today] as the BSP confirmed market expectations of easing price pressures and remarked that local inflation has now became more manageable,” the second trader noted. — K.A.N. Vidal