Peso strengthens further versus dollar

The peso strengthened further against the dollar on Tuesday ahead of the Bangko Sentral ng Pilipinas’ (BSP) rate-setting meeting this week.

The local currency closed at PHP 55.52 versus the dollar on Tuesday, climbing by 22 centavos from Monday’s PHP 55.74 finish, data from the Bankers Association of the Philippines’ website showed.

This was the peso’s strongest close since its PHP 55.25-per-dollar finish on May 8.

The local unit opened Tuesday’s session at PHP 55.75 per dollar. Its weakest showing was at PHP 55.84, while its intraday best was at PHP 55.52 against the greenback.

Dollars traded rose to USD 1.21 billion on Tuesday from the USD 1.11 billion seen on Monday.

“The peso appreciated amid likely hawkish signals from the BSP despite expectations of maintaining local policy rates unchanged this week,” a trader said in an e-mail.

All 15 economists in a BusinessWorld poll last week expected the Monetary Board to keep the key rate at a near 16-year high of 6.25% at its meeting on Thursday.

If realized, this would be the second straight meeting the BSP will leave interest rates untouched. The central bank raised borrowing costs by 425 basis points from May last year to March this year before pausing at its May 18 meeting.

The peso was also supported by the dollar’s decline on Tuesday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar index went down by 0.1% to 102.34 on Tuesday.

Mr. Ricafort added that the peso strengthened amid the seasonal increase in remittances from overseas Filipinos ahead of the start of a new school year.

For Wednesday, the trader said the peso could weaken anew against the dollar amid potentially hawkish remarks from St. Louis Federal Reserve President James B. Bullard overnight.

The trader sees the peso moving between PHP 55.45 and PHP 55.70 a dollar on Wednesday, while Mr. Ricafort sees it trading from PHP 55.45 to PHP 55.65. — AMCS