The peso strengthened slightly against the dollar on Tuesday, March 20, as investors stayed on the sidelines ahead of the monetary policy meetings of the US Federal Reserve (Fed) and Bangko Sentral ng Pilipinas (BSP).
The local currency finished at P52.08 against the dollar on Tuesday, gaining two centavos from its P52.10 close on Monday.
The peso traded within the range the whole day, opening flat at P52.10 versus the dollar. Its intraday low stood at P52.15, while its best showing was at yesterday’s P52.08 close against the US currency.
Dollars traded slightly decreased to $456.2 million yesterday from the $480.3 million that changed hands in the previous session.
“Yesterday was super quiet. We traded within the range so nothing new,” a trader told BusinessWorld in a phone interview.
“We’re only maintaining the range trade and we’re still waiting for the Monetary Board that’s why expect the few days to be quiet for the dollar-peso.”
Economists expect the Fed to hike its interest rates by 25 basis points during its two-day meeting, which started last night. Market player are also waiting for some clues as to how many tweaks the US central bank will make thereafter.
Locally, seven out of 12 economists polled by BusinessWorld said the BSP will keep its policy rates steady.
“I don’t think the Monetary Board will approve a policy rate increase in its March meeting inasmuch as inflation (new base) is still within their target range,” Victor A. Abola, economics professor at the University of Asia & the Pacific, previously said.
For Wednesday, March 21, the first trader sees the peso trading between P52 and P52.15, while the other trader gave a slightly wider range of P52 and P52.20.
“The local currency might weaken [on Wednesday] ahead of the release of likely stronger US home sales data in view of the US Federal Reserve meeting on Thursday,” the second trader said. — Karl Angelo N. Vidal