THE PESO strengthened against the greenback on Thursday after both the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) decided to maintain key policy rates.
The local unit closed at P50.711 on Thursday, appreciating by 9.9 centavos from its P50.81-per-dollar finish on Wednesday, according to data from the Bankers Association of the Philippines.
The peso started trading at P50.79 versus the dollar, which was also its weakest showing. Meanwhile, its intraday best was at P50.70 versus the greenback.
Dollars traded inched up to $794.1 million from $782.8 million seen on Wednesday.
A trader said the peso climbed after recent signals from the US Federal Reserve.
“The peso strengthened after Federal Reserve Chairman Jerome Powell noted that it might still take time hitting the two-percent US inflation target,” he said in an e-mail.
On Wednesday, the Fed kept its interest rates and hinted that borrowing costs will be unchanged anytime soon amid expectations of a continued environment of moderate economic growth and low unemployment until the 2020 presidential election, Reuters reported. With this, Fed’s benchmark overnight lending rate are maintained between 1.5% and 1.75%, 75 basis points below where it started last year.
Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the market barely moved on Thursday.
“It seems that the market has already digested the anticipated prudent pause of the BSP… The market would now be looking for other leads even as the Christmas holiday is fast approaching,” he said in a text message.
The BSP kept its policy rates at four percent for the overnight reverse repurchase facility, while rates for overnight deposit and lending were also maintained at 3.5% and 4.5%, respectively. In a press briefing, BSP Governor Benjamin E. Diokno said that their decision was supported by their assessment of “a benign inflation environment.”
For today, the trader expects peso to move within the range of P50.60-50.80 while Mr. Asuncion gave a forecast of P50.50-50.70. — L.W.T. Noble with Reuters