THE PESO inched higher against the dollar on Wednesday, with traders on a wait-and-see mode ahead of the monetary policy meeting of the central bank today.

The local unit closed at P51.30 against the greenback yesterday, three centavos stronger than the P51.33-per-dollar finish on Tuesday.

The peso opened the session slightly weaker at P51.35. Its best showing for the day was logged at P51.26 against the dollar, while its intraday low was at P51.47.

Dollars that changed hands on Wednesday totalled $721.85 million, climbing from yesterday’s $533.7 million.

“Initially, the trading was light, until after lunchtime when there was a surprise cut-down,” a trader said over the phone yesterday.

The trader said investors are on a wait-and-see mode ahead of the monetary policy meeting of Bangko Sentral ng Pilipinas (BSP) today.

“[Yesterday’s] trading is well within the range and our expectations. We’re only seeing consolidation of currency. We’re just waiting what the BSP will say [today],” another trader noted.

Economists expect the BSP’s policy-setting Monetary Board to remain on hold at today’s meeting, although some do expect a rate hike within the year.

The central bank has kept its policy stance steady for the last three years, except for procedural adjustments in June 2016 that allowed the migration to an interest rate corridor.

Currently, benchmark rates range between 2.5-3.5%.

“Dollar-peso is going up because of corporate demand. We are seeing a lot more corporate demand right now, which is oil related,” Jason Manalac, a trader at Philippine Bank of Communications.

The peso was also undermined by a fall in gross international reserves. The central data showed the reserves stood at $80.615 billion, the lowest in nearly two years. Indian rupee losses against the dollar extended to nearly 1% for the week.

Traders expect the peso to move between P51.15 and P51.35. Another trader gave a wider range of P51.25 to P51.50.

Meanwhile, most emerging Asian currencies were mixed on Wednesday as uncertainties about the US tax reform plan led to broad dollar weakness while the recent surge in oil prices hit currencies of major oil importing countries.

The dollar was down 0.2% at 113.800 yen, falling away from an eight-month high of 114.735 touched on Monday. The greenback’s fall was due to a media report that suggested a centerpiece corporate tax cut under discussion in US tax reforms plans could be delayed.

The Singapore dollar, China’s yuan and the Thai baht all gained against the dollar on the day.

Meanwhile, crude oil prices hovered near two-year highs, weighing on currencies of major oil importers in the region, such as the Indian rupee, the Indonesian rupiah and the Philippine peso.

The South Korean won’s fell more than quarter of a percent, after a strong rhetoric by the US President Donald J. Trump in Seoul on Wednesday.

Khoon Goh, head of Asia Research at ANZ, said increased expectations of Federal Reserve rate hikes in 2018 and the possibility of the passage of tax reforms by December, should be supportive for the dollar. — with Reuters

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