THE PESO strengthened further on Thursday as the market expected the central bank to keep rates steady at its policy meeting set to conclude later in the day.

The local unit closed at P48.43 versus the dollar on Thursday, climbing 6.5 centavos from its P48.495 finish on Wednesday.

The peso opened Thursday’s session stronger at P48.46 against the greenback. It climbed to as high as P48.41, while its weakest showing was at P48.51 versus the dollar.

Dollars traded rose to $807.6 million on Thursday from $726.57 million on Wednesday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message that the peso rose amid expectations that the Bangko Sentral ng Pilipinas (BSP) keep benchmark rates steady.

The BSP was widely expected to leave interest rates untouched at its meeting on Thursday as it wants to leave some room for further adjustments in case economic recovery lags, analysts said.

In a BusinessWorld poll held last week, 14 of 15 analysts said they expect the Monetary Board (MB) to keep interest rates steady at its fifth policy-setting review for the year on Oct. 1.

The MB has cut rates by 175 basis points so far this year. Rates on the overnight reverse repurchase, lending, and deposit facilities are currently record lows of 2.25%, 2.75% and 1.75% respectively.

BSP Governor Benjamin E. Diokno earlier said the current policy stance may be kept for the next few quarters. He said the BSP still has bullets when needed and is committed to a “long-term low inflation regime” and will continue to do what they have done “for maybe another two years.”

A trader said local currency saw stronger demand ahead of the central bank’s meeting.

“The peso appreciated from broad market expectations that the BSP will keep main interest rates unchanged in its policy decision later on Thursday,” the trader said in an e-mail.

On Friday, Mr. Ricafort expects the peso to move from P48.40 to P48.55 versus the dollar while the trader sees it ranging from P48.35 to P48.55. — KKTJ