Currencies 2 MIN READ

Peso climbs further vs dollar as Powell avoids policy outlook talk

January 11, 2023By Business World

THE PESO rose further against the dollar on Wednesday to post a fresh six-month high after US Federal Reserve Chair Jerome H. Powell avoided commenting on his monetary policy outlook in scheduled remarks on Tuesday and following strong data on foreign direct investments (FDI) in the Philippines.

The local currency closed at PHP 54.80 versus the greenback on Wednesday, rising by seven centavos from Tuesday’s finish of PHP 54.87, data from the Bankers Association of the Philippines showed.

This is the peso’s best close since it ended at PHP 54.77 per dollar on June 28, 2022.

The peso opened Wednesday’s trading session at PHP 54.80 a dollar. Its weakest showing was at PHP 55.04, while its intraday best stood at PHP 54.75 against the greenback.

Dollars traded went down to USD 1.005 billion from USD 1.067 billion on Tuesday.

A trader said in an e-mail that the peso strengthened after Mr. Powell stayed silent on monetary policy in his speech at a forum sponsored by the Swedish central bank.

“The peso strengthened after Fed Chair Jerome Powell did not make comments on the potential Fed policy move during this week’s central bankers symposium in Sweden. Market participants then perceived that the Fed Chairman did not echo the prior hawkish statements of his fellow Federal Reserve officials,” the trader said.

Fed Governor Michelle Bowman said on Tuesday that the bank will have to raise interest rates further to combat high inflation, along with other Fed officials remaining hawkish on future rate hikes by the Federal Open Market Committee (FOMC), Reuters reported.

The FOMC raised borrowing costs by 425 bps last year, bringing the federal funds rate to a 4.25%-4.5% range. Its first meeting for the year will be held from Jan. 31 to Feb. 1.

The peso was also supported by the FDI data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

FDI net inflows rose by 6.3% year on year to a six-month high of USD 923 million in October 2022, BSP data showed. This also marked a 47.4% increase from the USD 626 million recorded in September 2022.

For Thursday, Mr. Ricafort sees the peso moving between PHP 54.70 and PHP 54.90 against the dollar, while the trader gave a wider forecast range of PHP 54.65 to PHP 54.90. — A.M.C. Sy with Reuters

 

This article originally appeared on bworldonline.com

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