THE PESO may strengthen this week amid the dollar’s sustained weakness and ahead of the US Federal Reserve’s policy meeting.
The local unit closed at PHP 54.47 per dollar on Friday, weakening by seven centavos from its PHP 54.40 finish on Thursday, data from the Bankers Association of the Philippines’ website showed.
Week on week, the peso strengthened by seven centavos from its PHP 54.54 finish on Jan. 20.
The peso opened Friday’s session at PHP 54.40 per dollar. It dropped to as low as PHP 54.54, while its intraday best was at PHP 54.21 against the greenback.
Dollars exchanged went down to USD 946.65 million on Friday from USD 730 million on Thursday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso declined against the dollar on Friday due to a spike in global crude oil prices.
Brent futures settled down 81 cents or 0.9% on Friday at USD 86.66 per barrel, up just 3 cents from the previous week’s settlement.
US crude also fell USD 1.33 or 1.6% to settle at USD 79.68, 2% lower on the week, after the benchmarks rose 2% on Thursday.
“The gauge of the US dollar versus major global currencies also corrected slightly higher but still hovering near the lowest in eight months,” Mr. Ricafort added.
“The dollar rebounded [on Friday] against most counterparts, causing the peso-dollar exchange rate to close higher,” a trader said in a Viber message.
Against a basket of currencies, the dollar index rose 0.08% to 101.92 on Friday.
The euro was 0.17% lower at USD 1.08725 while the sterling slipped 0.12% to USD 1.239, Reuters reported.
On Thursday, the dollar index fell to 101.5, its lowest level since end-May.
For this week, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a report that he sees the “theme of dollar weakness” to remain intact ahead of the Fed’s policy meeting.
Mr. Asuncion said they expect a 25-basis-point (bp) hike at the meeting.
The trader likewise said they expect the peso to stay at the PHP 54-per-dollar level this week as the market waits for the Fed’s rate decision.
The US central bank last year raised borrowing costs by 425 bps, bringing the fed funds rate to 4.25-4.5%. It will hold its first policy meeting for the year on Jan. 31 to Feb. 1.
Mr. Asuncion expects the peso to move from PHP 54.20 to PHP 54.80 per dollar for this week, while Mr. Ricafort gave a forecast range of PHP 54.25 to PHP 54.65. The trader sees the peso moving between PHP 54 and PHP 55. — A.M.C. Sy with Reuters
This article originally appeared on bworldonline.com