The peso rebounded against the dollar on Tuesday on expectations of rate cuts from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve later this year.
The local unit closed at PHP 56.155 per dollar on Tuesday, strengthening by 17.5 centavos from its PHP 56.33 finish on Monday, based on Bankers Association of the Philippines data.
The peso opened Tuesday’s session weaker at PHP 56.35 against the dollar. Its intraday best was at PHP 56.10, while its weakest showing was at PHP 56.435 versus the greenback.
Dollars exchanged went down to USD 1.397 billion on Tuesday from USD 1.71 billion on Monday.
“The peso recovered amid prospects of delayed policy rate cuts from the Bangko Sentral [ng Pilipinas] this year,” a trader said in an e-mail.
The BSP is unlikely to begin its easing cycle in the first half of the year amid upside risks to inflation, Mr. Remolona said to reporters over the weekend.
The Monetary Board raised benchmark borrowing costs by a cumulative 450 basis points (bps) from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%.
The central bank will hold its first policy meeting for this year on Feb. 15.
The peso was also supported by a weaker dollar recently amid expectations of a delayed rate cut by the US central bank, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The US central bank hiked the fed funds rate by 525 bps from March 2022 to July 2023 to the 5.25-5.5% range.
For Wednesday, the trader said the peso could strengthen further ahead of a likely softer US gross domestic product report.
The trader sees the peso moving between PHP 55.95 and PHP 56.20 per dollar on Wednesday, while Mr. Ricafort expects it to range from PHP 56.05 to PHP 56.25. — AMCS