Peso inches higher vs dollar as bank concerns ease

THE PESO edged higher against the dollar on Thursday on easing worries over the global banking sector and amid the smaller month-on-month increase in the National Government’s debt. 

The local unit closed at PHP 54.415 per dollar on Thursday, gaining 3.5 centavos from its PHP 54.45 finish on Wednesday, based on Bankers Association of the Philippines data.

The peso opened Thursday’s session at PHP 54.39 per dollar, which was also its intraday best. Its weakest showing was at PHP 54.495 against the greenback.

Dollars exchanged inched down to USD 1.009 billion on Thursday from USD 1.112 billion on Wednesday.

“The peso appreciated amid improving optimism on the global banking sector after the recent US Congress hearing on Silicon Valley Bank’s (SVB) fall,” a trader said in an e-mail.

Officials from the US Federal Reserve and other regulators told US lawmakers on Wednesday that the scope for blame for SVB’s failure stretches across bank executives. 

Michael Barr, Fed Vice Chair for Supervision criticized SVB for going months without a chief risk officer and for how it modeled interest rate risk, Reuters reported. 

The peso strengthened following the release of data showing a smaller month-on-month increase in the government’s outstanding debt, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The National Government’s total debt hit a fresh record-high of PHP 13.75 trillion at the end of February amid the increase in domestic borrowings, the Bureau of the Treasury (BTr) said on Thursday.

Preliminary data from the BTr showed outstanding debt inched up by 0.4% or PHP 54.26 billion from the PHP 13.698 trillion as of end-January “primarily due to the net issuance of domestic securities.”

For Friday, the trader said the peso could strengthen further ahead the release of data showing potentially lower US personal consumption expenditures (PCE) inflation.

Mr. Ricafort said the PCE data could give a clue on the US Federal Reserve’s next policy move.

The trader sees the peso moving between PHP 54.25 and PHP 54.50 on Friday, while Mr. Ricafort gave a slightly wider forecast range of PHP 54.30 to PHP 54.50 per dollar. — K.B. Ta-asan with Reuters