The peso could strengthen this week amid the dollar’s continued weakness, and supported by the seasonal increase in remittances.
The local unit closed at PHP 55.655 per dollar on Friday, strengthening by 14 centavos from PHP 55.795 on Thursday, based on Bankers Association of the Philippines data.
Week on week, however, the peso weakened by 35.5 centavos from its PHP 55.30 close on Dec. 7.
The peso opened Friday’s session at PHP 55.73 against the dollar. Its intraday best was at PHP 55.65, while its weakest showing was at PHP 55.75 versus the greenback.
Dollars exchanged fell to USD 846.7 million on Friday from USD 1.49 billion on Thursday.
The peso appreciated on Friday as the dollar weakened amid expectations of rate cuts by the US Federal Reserve in 2024, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The US central bank kept the fed funds rate steady at the 5.25%-5.5% range for a third straight time during its Dec. 12-13 meeting, with Fed Chair Jerome H. Powell saying they are likely done hiking borrowing costs.
It raised rates by a total of 525 basis points (bps) from March 2022 to July 2023.
Mr. Ricafort added this could be matched by the Bangko Sentral ng Pilipinas (BSP) next year.
The BSP on Thursday kept its policy rate steady at a 16-year high of 6.5% for a second straight meeting but said it remained cautious amid lingering upside risks to inflation.
The Monetary Board has raised benchmark interest rates by 450 bps since it began its tightening cycle in May 2022.
For this week, the peso may continue to strengthen as the dollar’s weakness persists and as remittances continue to rise amid the holiday season, Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message
“USDPHP (US dollar-Philippine peso exchange rate) may continue to track the USD weakness like that of today. Though the recent global market rallies wane, the USDPHP will be driven by peaking remittance inflows,” he said on Friday.
In October, cash remittances from overseas Filipino workers (OFWs) rose by 3% year on year to USD 3 billion, as migrant Filipinos sent more money home ahead of the holiday season.
The amount of money sent by OFWs was the highest in 10 months, or since the USD 3.16 billion in end-2022, data from the BSP showed.
Month on month, the 3% growth in cash remittances was faster than the 2.6% seen in September and marked the fastest remittances have risen since 3.7% in April.
For this week, Mr. Asuncion expects the peso to move between PHP 55.40 and PHP 55.90 per dollar, while Mr. Ricafort sees the peso ranging from PHP 55.25 to PHP 55.75. — Aaron Michael C. Sy