The peso strengthened versus the greenback as the chief of the US Federal Reserve signaled it could keep rates near zero while the job market remains challenged.
The local unit closed at P50.68 per dollar on Monday, gaining 10.6 centavos from its P50.786 finish on Friday, based on data from the Bankers Association of the Philippines.
The peso opened Monday’s session stronger at P50.73 per dollar. Its intraday best was at its close of P50.68, while its weakest showing was at P50.825 against the greenback. Dollars exchanged dropped to $923.4 million on Monday from $1.068 billion on Friday.
The peso appreciated versus the greenback on Monday after Fed Chairman Jerome Powell stressed they will keep rates low even when they start the asset purchases sooner, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said via Viber.
“I do think it’s time to taper. I don’t think it’s time to raise rates. We think we can be patient and allow the labor market to heal,” Mr. Powell said at a virtual appearance on Friday as reported by Reuters.
Mr. Powell’s view is high inflation will likely abate next year. Meanwhile, he said the Fed’s full employment goal could be met next year, if supply-constraints eased as expected and if the service sector creates more jobs.
Meanwhile, a trader said in an e-mail that the market was also monitoring US spending proposals from Democrat lawmakers.
Reuters reported on Monday that Democrats are expected to present a bill that would increase tax collections from the country’s roughly 700 billionaires to help pay for expanding the social safety net, with the plan likely to be between $1.5 trillion to $2 trillion.
For Tuesday, Mr. Ricafort gave a forecast range of P50.57 to P50.77, while the trader expects the local unit to move within P50.60 to P50.80 per dollar. — L.W.T. Noble with Reuters