THE PESO is expected to trade sideways against the dollar this week as the market awaits new catalysts.
The local currency closed at PHP 55.67 versus the dollar on Friday, appreciating by 20 centavos from Thursday’s PHP 55.87 finish, data from the Bankers Association of the Philippines’ website showed.
Week on week, the peso likewise gained by 12 centavos from its PHP 55.79 close on May 12.
The local unit opened Friday’s session at PHP 55.75 per dollar. Its worst showing for the day was at PHP 55.76, while its intraday best was at PHP 55.62 versus the greenback.
Dollars traded fell to USD 979.6 million on Friday from the USD 1.228 billion recorded on Thursday.
The peso strengthened against the dollar on Friday on expectations that the Bangko Sentral ng Pilipinas (BSP) could keep benchmark interest rates unchanged in the near term, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The BSP paused its tightening cycle in its meeting last week and signaled that rates could be steady at its next two to three meetings as inflation continues to ease.
The Monetary Board kept its policy rate steady at 6.25% on Thursday. Interest rates on the overnight deposit and lending facilities were also maintained at 5.75% and 6.75%, respectively.
This is the first time the BSP left rates untouched after hiking borrowing costs by a total of 425 basis points in nine straight meetings.
BSP Governor Felipe M. Medalla said after the review that they could keep their policy settings steady in the next two to three policy meetings on June 22, Aug. 17, and Sept. 21.
For this week, the peso could move sideways as the market awaits fresh drivers, Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a report.
Mr. Asuncion said the greenback could remain strong on safe-haven demand due to a stalemate in the US debt ceiling discussions.
US President Joseph R. Biden, Jr. and top congressional Republican Kevin McCarthy could speak as soon as Sunday in talks over raising the federal USD 31.4-trillion debt ceiling, Reuters reported.
Officials did not meet on Saturday, and they announced no progress from their prior meetings on Friday or any plan to talk again. Instead, both sides cast the other’s proposals as too extreme.
The dollar fell on Friday after Federal Reserve Chair Jerome Powell struck a moderately dovish stance, contrary to market expectations, saying that given how credit conditions have tightened, the US central bank may not need to raise interest rates as much.
A pause in negotiations to raise the federal government’s debt ceiling also pressured the dollar.
For this week, Mr. Asuncion sees the peso trading from PHP 55.60 to PHP 56.20 per dollar, while Mr. Ricafort sees it moving between PHP 55.50 and PHP 56. — AMCS with Reuters
This article originally appeared on bworldonline.com