Peso strengthens on dovish Fed

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THE PESO maintained its strength for a second straight session on Monday, riding on dovish cues from the US Federal Reserve which kept the dollar at bay.

The peso closed at P52.38 versus the greenback yesterday, climbing 13 centavos from its P52.51 finish on Friday to mark its best showing in a month since a P52.32 close on Dec. 3, 2018.

The local unit traded stronger throughout the session, opening at P52.40 against the dollar. It touched P52.445 as its weakest point within the day and logged its best showing at P52.315 before settling at the closing rate.

Two traders sought for comment said the peso benefited from dovish remarks made by Fed Chair Jerome H. Powell, which market players took as a sign that the United States will slow down on further rate hikes.

“The peso strengthened [on Monday] after Federal Reserve chairman Jerome Powell said that the US central bank will be ‘patient’ in its monetary policy, which signalled dovish cues that the Fed would likely be cautious in its stance for this year following the recent weak global economic data,” one trader said.

In a speech last Friday, Mr. Powell said the Fed is not on a preset path of rate hikes.

Another currency trader pointed out that aggressive selling also added to the peso trades.

Dollars traded yesterday reached $822.45 million, higher than the $684.95 million which exchanged hands last week.

The second trader added that the ongoing shutdown of the US federal government could keep the dollar weak.

“Locally, there are no expected drivers. It’s also light in the US especially given their shutdown,” the trader said.

For today, the first trader expects the peso to trade between P52.30 and P52.50. The other trader said there may be room for the peso to strengthen further to play between the P52.25-P52.50 range. — Melissa Luz T. Lopez