THE PESO strengthened against the dollar on Thursday after US President Joseph R. Biden, Jr. and Republican House of Representatives Speaker Kevin McCarthy said that they would negotiate directly on a deal to raise the US debt ceiling.
The local currency closed at PHP 55.87 versus the dollar on Thursday, rising by 33 centavos from Wednesday’s PHP 56.20 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Thursday’s session at PHP 56.05 per dollar, which was also its worst showing for the day. Its intraday best was at PHP 55.86 versus the greenback.
Dollars traded went down to USD 1.228 billion on Thursday from the USD 1.64 billion recorded on Wednesday.
The peso rose as global sentiment improved amid optimism surrounding the US debt ceiling negotiations, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso appreciated after US President Biden and House Speaker McCarthy reported an improvement in the US debt ceiling negotiations,” a trader likewise said.
Mr. Biden and top US congressional Republican Mr. McCarthy on Wednesday underscored their determination to reach a deal soon to raise the federal government’s $31.4-trillion debt ceiling and avoid an economically catastrophic default, Reuters reported.
After a months-long standoff, the Democratic president and the speaker of the House of Representatives on Tuesday agreed to negotiate directly on a deal. An agreement needs to be reached and passed by both chambers of Congress before the federal government runs out of money to pay its bills, as soon as June 1.
Sentiment also got a boost from the widely expected pause in interest rate hikes by the Bangko Sentral ng Pilipinas (BSP), Mr. Ricafort added.
The BSP on Thursday kept benchmark interest rates unchanged as it sees inflation returning within its target band by the fourth quarter, even as price pressures remain tilted to the upside.
The Monetary Board kept the policy rate or the interest rate on the BSP’s overnight reverse repurchase facility steady at 6.25%. Rates on the overnight deposit and lending facilities were likewise left untouched at 5.75% and 6.75%, respectively.
The move was predicted by 13 out of 18 analysts in a BusinessWorld poll held last week.
The central bank paused for the first time after hiking in nine straight meetings, raising borrowing costs by a total of 425 basis points from May 2022 to March 2023.
For Friday, the trader sees the peso moving between P55.70 and P55.95 per dollar, while Mr. Ricafort expects it to trade from PHP 55.80 to PHP 56. — AMCS with Reuters
This article originally appeared on bworldonline.com