The peso rose to a three-month high on Wednesday as markets await the US June inflation report to be released overnight.
The local currency closed at PHP 54.93 versus the dollar on Wednesday, strengthening by 32 centavos from Tuesday’s PHP 55.25 finish, data from the Bankers Association of the Philippines’ website showed.
This was the peso’s strongest close since its PHP 54.93 finish on April 11.
The local unit opened Wednesday’s session at PHP 55.18 per dollar, which was also its weakest showing of the day. Meanwhile, its intraday best was at PHP 54.93 against the greenback.
Dollars traded climbed to USD 1.36 billion on Wednesday from the USD 1.26 billion seen on Tuesday.
The peso continued to strengthen on Wednesday as the market awaited the US inflation report to be released overnight, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso broke past below the PHP 55 level ahead of a potentially weaker US consumer inflation report tonight,” a trader likewise said in an e-mail.
The US consumer price index (CPI) is widely expected by markets to ease to 3% in June from 4% in May, moving closer to the Fed’s 2% target, Mr. Ricafort said.
The US CPI rose by 0.1% in May after increasing 0.4% in April. In the 12 months through May, the CPI climbed 4%.
Mr. Ricafort said the inflation report could prompt the US Federal Reserve to begin cutting rates if US CPI falls below the Fed’s 2% target before the end of the year.
The Fed last month paused its tightening cycle after hiking its target interest rate by a cumulative 500 basis points to a range between 5% and 5.25%.
The US central bank will next meet on July 25-26 to review policy.
Mr. Ricafort said the peso rose amid the continued weakening of the dollar.
In the currency market, the dollar index, which measures the US currency against six peers, fell 0.167% at 101.43, having slid as low as 101.34, its lowest in two months, Reuters reported.
For Thursday, the trader said the peso could strengthen further on the likely softer US consumer inflation report.
The trader sees the peso moving between PHP 54.90 and PHP 55.15 per dollar on Thursday, while Mr. Ricafort forecast it to range from PHP 54.85 to PHP 55.05. — Aaron Michael C. Sy with Reuters
This article originally appeared on bworldonline.com