THE peso appreciated versus the greenback on Tuesday on risk-off sentiment after the US Federal Reserve bared plans to buy corporate bonds.
The local unit finished trading at P50.07 against the dollar yesterday, stronger by 27.5 centavos from its P50.24 close on Monday, according to data from the Bankers Association of the Philippines.
The peso opened the session at P50.23 per dollar. Its intraday weakest was at P50.26 while its intraday best was at P50.07 against the greenback.
Dollars traded increased to $901.5 million on Tuesday from the $791.9 million recorded on Monday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said there was improved sentiment for the peso due to recent signals of quantitative easing from the Fed.
“The peso exchange rate closed much stronger after some improvement in global market sentiment after [news of] Fed’s plans to buy corporate bonds as part of its quantitative easing measures,” Mr. Ricafort said in a text message.
Reuters on Tuesday reported the Fed’s decision to start buying corporate bonds through the secondary market corporate credit facility to provide market support during the crisis.
The Fed will employ an indexing approach for its buying spree in a bid to create a portfolio that is based on a broad, diversified market index of US corporate bonds.
Meanwhile, a trader attributed the peso’s strength to updates on quarantine measures in the country.
“Most areas in the country will still be under a general community quarantine and the market took this as a sign of better chances to restart the economy,” the trader said in a phone call.
Presidential Spokesperson Harry L. Roque, Jr. said on Tuesday that President Rodrigo R. Duterte ordered the extension of general community quarantine until June 30 in some regions including Metro Manila.
Mr. Ricafort gave a forecast range of P49.95 to P50.20 per dollar while the trader expects the local unit to move between the P49.80 to P50.20. — L.W.T. Noble with Reuters