Peso rises to two-week high on divided Fed, inflation bets

The peso continued to strengthen against the dollar on Tuesday, posting a two-week high, as several US Federal Reserve officials signaled that they are open to another rate cut next month despite the cautious tone adopted by its chief.

Bets of within-target Philippine headline inflation in October also supported the currency against the greenback.

The local unit closed at PHP 58.515 per dollar, rising by 27.5 centavos from its finish of PHP 58.79 on Monday, Bankers Association of the Philippines data showed.

This was its best finish in nearly two weeks or since it ended at PHP 58.41 a dollar on Oct. 22.

The peso opened Tuesday’s session stronger at PHP 58.70 against the greenback. Its intraday best was at PHP 58.51, while its weakest showing was at PHP 58.75 versus the dollar.

Dollars exchanged inched up to USD 1.327 billion on Tuesday from USD 1.326 billion on Monday.

“The peso continued to appreciate after several Federal Reserve officials expressed openness towards delivering a rate cut in the December Fed meeting,” a trader said in an e-mail on Tuesday.

Fed officials continued offering competing views of where the economy stands and the risks facing it in the absence of economic data suspended due to the shutdown, Reuters reported.

The Fed cut rates last week, but Chair Jerome H. Powell suggested that might be the last cut of the year. Traders are now pricing in a 65% chance of a rate cut in December, compared with 94% a week earlier, CME FedWatch showed.

On Monday, Fed Governor Lisa Cook portrayed a tug-of-war view of the policy debate, saying elevated risks to both the central bank’s employment and inflation mandates leave the Dec. 9-10 meeting “live” for a possible rate cut, but not a lock.

Speaking earlier in the day, San Francisco Fed chief Mary Daly offered a similarly even-handed perspective, saying she viewed last week’s cut as further “insurance” against labor market weakening and has an “open mind” about the need for a similar move in December.

The peso continued to correct ahead of the release of Philippine October inflation data on Wednesday (Nov. 5), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He said the October consumer price index (CPI) “is expected to be slightly higher versus 1.7% in September 2025 but still considered benign or still below the BSP’s (Bangko Sentral ng Pilipinas) inflation target range of 2%-4% and could still support future local policy rate cuts.”

A BusinessWorld poll of 17 analysts yielded a median estimate of 1.8% for the October CPI, which would be up slightly from the 1.7% clip in September but slower than the 2.3% seen in the same month last year.

This would be within the BSP’s 1.4-2.2% forecast for the month and mark the eighth straight month that inflation was below its 2%-4% annual goal.

The trader said the peso may rise further on Wednesday on expectations of within-target Philippine inflation.

The trader sees the peso moving between PHP 58.35 and PHP 58.60 versus the greenback, while Mr. Ricafort said the local unit could trade from PHP 58.40 to PHP 58.65. — Aubrey Rose A. Inosante with Reuters