Peso rebounds as focus turns to BSP review

The peso recovered against the dollar on Tuesday as the market expects the Bangko Sentral ng Pilipinas (BSP) to pause its easing cycle against this week even as September inflation came in slower than expected.

The local unit closed at PHP 58.10 versus the greenback, rising by 25 centavos from its PHP 58.35 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Tuesday’s session steady at PHP 58.35 versus the dollar. Its intraday best was at PHP 58.08, while its worst showing was at PHP 58.38 against the greenback.

Dollars exchanged rose to USD 1.34 billion on Tuesday from USD 1.19 billion on Monday.

“The dollar-peso closed lower as local inflation data came out lower than expected but was still higher than last month’s reading, giving BSP space to hold rates,” a trader said in a phone interview.

Headline inflation picked up to 1.7% in September from 1.5% in August, the Philippine Statistics Authority reported on Tuesday.

This was the fastest pace in six months or since the 1.8% print in March, but was within the BSP’s 1.5-2.3% forecast for the month and below the 1.9% median estimate in a BusinessWorld poll of 12 analysts.

For the first nine months, the CPI averaged 1.7%, matching the BSP’s forecast for the year and still below its 2-4% annual target.

The Monetary Board will meet to review policy on Thursday (Oct. 9), with analysts divided on their rate call. Ten of the 16 analysts in a BusinessWorld poll expect the central bank to pause anew after it delivered three straight cuts, while the remaining six said a fourth consecutive 25-basis-point (bp) reduction could happen this week to help support domestic demand and boost the economy.

The central bank has lowered benchmark borrowing costs by a total of 150 bps since it kicked off its rate cut cycle in August 2024, with the policy rate now at 5%. BSP Governor Eli M. Remolona, Jr. has left the door open to one more cut this year that could mark the end of this easing round.

The peso rose following the release of data showing that the country’s gross international reserves hit an 11-month high at end-September as this could provide support to the local unit, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Preliminary BSP data showed that the country’s dollar reserves rose to USD 108.805 billion at end-September, the highest level since the USD 111.084 billion in October 2024.

For Wednesday, the trader said the peso could consolidate between PHP 57.90 and PHP 58.30 per dollar, while Mr. Ricafort sees it ranging from PHP 58 to PHP 58.25. — A.M.C. Sy