THE PESO strengthened on Friday on the back of a fresh reserve requirement ratio (RRR) cut announced by the central bank, as well as risk-on sentiment due to an unclear Brexit, which supported currencies in emerging markets.

The local unit closed at P51.135 against the greenback on Friday, appreciating by 10 centavos from the P51.24 versus the dollar finish on Thursday.

On a week-on-week basis, the peso strengthened by 16 centavos compared to its P51.295-a-dollar close on Oct. 18.

The peso started the trading session at P51.25 versus the dollar. Its weakest point for the day was seen at P51.33, while its best shot against the dollar was at P51.12 against the greenback.

Dollars traded on Friday rose to $1.396 billion from $1.225 billion on Thursday.

A trader said the peso’s movement for the day was influenced by the unclear path of the Brexit as well as the latest RRR cut which will be effective by December.

“During the afternoon session, the peso gained against the dollar anticipated flows for the weekend. The market seemed to also factor in the RRR cut by the BSP (Bangko Sentral ng Pilipinas) as it will be beneficial in the medium term for Philippine growth and the financial markets,” a trader said in a phone call.

Meanwhile, another trader also traced the Brexit developments as well as the strength of currencies in the region to have influenced the local unit’s performance on Friday.

“There is a slight risk-on sentiment overnight given the uncertainty of Brexit talk. The day also saw emerging market currencies including those in Southeast Asian up against the dollar,” the second trader said in a phone call.

On Thursday, the BSP’s Monetary Board said it will reduce banks’ RRR by another 100 basis points for universal banks, non-bank financial institutions with quasi-banking functions (NBQBs), and thrift banks effective December, trimming their reserve requirement to 14% for both big banks and NBQBs and to four percent for thrift banks.

Meanwhile, European Union governments are unlikely to decide on Friday whether to grant Britain’s requested for an extension of the Brexit deadline and will probably postpone decision until Monday, senior EU diplomats told Reuters.

The British parliament is to vote on Monday whether to have an election on Dec 12, which would be the kind of major political development the EU has long said would be the necessary justification for a third extension of the Brexit deadline.

Reuters reported that most Asian currencies strengthened against the dollar on Friday although investors refrained from big bets while awaiting developments in the Brexit drama and Sino-US trade talks as well as next week’s US Federal Reserve meeting. — Luz Wendy T. Noble