THE PESO strengthened further against the dollar on Friday ahead of US data and the implementation of the first wave of reductions in banks’ reserve requirement ratios (RRR).
The local currency closed at P52.16 against the greenback on Friday, higher by 34 centavos versus its previous finish of P52.50 per dollar.
The peso closed at its best level for the day. It opened Friday’s session flat at P52.50 a dollar, while its intraday low was logged at P52.525.
Trading volume grew to $846.86 million from the $740 million seen the previous day.
“We saw dollar-peso move in tandem with Asian trading,” a trader said, noting that the market was mostly positioning ahead of the weekend.
Another trader said that the peso climbed “ahead of likely weaker April 2019 US durable goods report tonight.”
On the other hand, Michael L. Ricafort, Rizal Commercial Banking Corp. (RCBC) economist, said in a text message that the peso strengthened on the back of “positive sentiment on the economy and financial markets brought about by yesterday’s latest RRR cut for smaller banks, exactly a week after the RRR cut on large banks…thereby leading to increased supply of peso funds/lending by banks and lower borrowing costs all that lead to increased economic activities.”
The Bangko Sentral ng Pilipinas is set to cut to 17% the current RRR of universal and commercial banks at 18% on May 31, to be followed by a 50-basis point (bp) cut on June 28 and another 50-bp cut on July 26. The reserve ratio imposed on thrift banks will also be slashed to 6% from the current 8% following the same schedule.
Rural and cooperative banks’ reserve requirements will likewise be reduced by 100 bps to 4% from 5% effective May 31. — RJNI