THE peso strengthened Friday ahead of an expected cut in Fed policy rates and amid positive sentiment generated by the G20 meeting.
The peso closed at P52.24 against the dollar, against the P52.27 finish on Thursday. This was the peso’s highest level in more than a year or since it closed at P51.12 on Feb. 7, 2018.
The peso opened at P51.2, rising as high as P51.17, while the low was P51.27.
Volume thinned to $726.79 million from $876.87 million in the previous session.
“The general expection for the peso this week is to strengthen. The external environment is generally contributing to this expectation with positive (leads) coming from the G20 meeting,” Ruben Carlo O. Asuncion, Unionbank of the Philippines Chief Economist, said in a text message.
A second trader said, “The peso strengthened following the release of weaker US GDP (gross domestic product) and PCE (personal consumption expenditure) inflation reports which are expected heighten the view of a possible policy rate cut from the Federal Reserve in July.”
The G20 Summit in Osaka, Japan officially opened on Friday, with US President Donald J. Trump and his Chinese counterpart Xi Jinping set to meet.
Mr. Trump said a bilateral meeting with his Chinese counterpart might result in a trade deal, although he noted another round of tariffs on all remaining Chinese imports are ready to go if talks collapse again.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) released its inflation forecast range for June at 2.2-3%. Economists expect a reduction in policy rates by August following an easing inflation in the first and second quarters.
The BSP reduced by 50 basis points the reserve ratios of universal and commercial banks to 16.5% effective Friday. — Reicelene Joy N. Ignacio