THE PESO strengthened on Friday on prospects of another rate cut this year and amid developments in the trade talks between the world’s two biggest economies.
The local unit finished trading at P50.755 on Friday, appreciating by 2.50 centavos from the Thursday close of P50.78 against the dollar, according to data from the website of the Bankers’ Association of the Philippines.
Week-on-week, it also strengthened by 7.50 centavos from the P50.83 close on Jan. 31.
The peso opened at P50.85 versus the greenback. Its weakest showing for the day was at P50.86, while its intraday best was at P50.74 per dollar.
Dollars traded dropped to $771.92 million from $917.8 million on Thursday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso’s strength came after the central bank’s continued dovish stance.
“Peso exchange rate closed stronger after BSP Governor [Benjamin E. Diokno] signalled another rate cut possible by mid-2020, after yesterday’s cut in local policy rates, improving sentiment on the local financial markets,” he said in a text message.
Mr. Diokno told Bloomberg TV in an interview on Friday that another rate cut may be possible by the middle of the year.
On Thursday, the BSP reduced key policy rates by 25 basis points, trimming the reverse repurchase, overnight lending and deposit rates to 3.75%, 4.25%, and 3.25%, respectively.
Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion cited developments in the US-China trade deal as a driver.
“Market perception has slightly improved and more confident because of the reaffirmation to the commitment by both US and China to their phase 1 deal,” Mr. Asuncion said in a text message.
Reuters reported that White House spokesperson Judd Deere said that US President Donald J. Trump and Chinese President Xi Jinping have reaffirmed their commitment to implementing the phase one of their trade deal through a conversation held on Thursday.
Aside from this, Mr. Trump has also expressed confidence in China’s strength and resilience as it battles through the coronavirus outbreak that has sickened around 30,000 in Asia’s biggest economy. — L.W.T. Noble with Reuters