Peso rebounds on profit taking

The peso appreciated against the dollar on Wednesday due to profit taking after the local unit ended at the PHP 58 level for the first time in more than 18 months in the previous session.

The local unit closed at PHP 58.06 versus the greenback on Wednesday, strengthening by 21 centavos from its PHP 58.27 finish on Tuesday, Bankers Association of the Philippines data showed.

Tuesday’s finish was the peso’s worst finish in more than 18 months or since its PHP 57.275-per-dollar close on Nov. 8, 2022.

The peso opened Wednesday’s session stronger at PHP 58.15 against the dollar. Its intraday best was its close of PHP 58.06, while its weakest showing was at PHP 58.235 versus the greenback.

Dollars exchanged went down to USD 1.29 billion on Wednesday from $1.62 billion on Tuesday.

“The peso strengthened due to profit taking by market participants after the local currency hit an 18-month low,” a trader said in an e-mail.

The peso could have been supported by intervention from the Bangko Sentral ng Pilipinas (BSP) after its sharp depreciation on Tuesday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

BSP Governor Eli M. Remolona, Jr. on Tuesday said the central bank will participate in the foreign exchange market if necessary to smoothen excessive volatility.

For Thursday, the trader said the peso could weaken further due to potentially dovish signals from the US Federal Reserve meeting minutes to be released overnight.

The trader sees the peso moving between PHP 57.90 and PHP 58.15 per dollar on Thursday, while Mr. Ricafort expects it to range from PHP 57.95 to PHP 58.15. — A.M.C. Sy