THE PESO continued to strengthen against the dollar on Wednesday on risk-off sentiment due to expectations of a dovish stance from the minutes of the US Federal Reserve’s latest meeting.
The local unit closed at P48.575 per dollar on Wednesday, appreciating by five centavos from its P48.625 finish on Tuesday, data from the Bankers Association of the Philippines showed.
This was the peso’s strongest finish in more than three years or since its P48.48-per-dollar close on Nov. 4, 2016, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
The peso started the trading session at P48.61 versus the dollar, which was also its weakest showing for the day. Meanwhile, its intraday best was at P48.525 against the greenback.
Dollars traded slipped to $794.5 million on Wednesday from the $875.4 million recorded on Tuesday.
The peso gained on the back of market expectations of dovish signals from the US Federal Reserve, a trader said.
“The peso appreciated on expectations of dovish guidance from the US Federal Reserve policy meeting minutes,” the trader said in an e-mail.
The US central bank in July left policy rates untouched at near-zero levels, with Fed Chairman Jerome Powell saying they will do what they can “for as long as it takes” to mitigate the impact of the pandemic and to foster growth.
The minutes of the Federal Open Market Committee’s July policy review will be released on Aug. 21.
The peso also continued to strengthen versus the dollar after the easing of restriction measures in Metro Manila, Mr. Ricafort said.
“[T]his helps improve economic recovery prospects and valuations,” he added.
Metro Manila and surrounding provinces Bulacan, Cavite, Laguna and Rizal are back under general community quarantine until Aug. 31 after two weeks under a tighter lockdown.
For today, the trader gave a forecast of P48.45 per dollar while Mr. Ricafort expects exchange rates to move within the P48.45 to P48.60 levels. — L.W.T. Noble with Reuters