Peso rises on easing market worries

The peso inched up against the dollar on Tuesday amid easing concerns over the war in the Middle East.

The local currency closed at PHP 56.746 versus the dollar on Tuesday, strengthening by 3.4 centavos from Monday’s PHP 56.78 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Tuesday’s session stronger at PHP 56.70 per dollar. Its intraday best was at PHP 56.67, while its weakest showing was at PHP 56.78 against the greenback.

Dollars traded jumped to USD 1.109 billion on Tuesday from the USD 859.9 million on Monday.

“The peso strengthened amid easing market concerns over further escalation of the ongoing Israel-Hamas conflict,” a trader said in an e-mail.

Market sentiment improved after US President Joseph R. Biden, Jr. said he would go to Israel to help prevent the Israel-Hamas war from escalating, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Mr. Biden will make a high stakes visit to Israel on Wednesday to show support for its war on Hamas, after Washington said Prime Minister Benjamin Netanyahu had agreed to let humanitarian aid reach besieged Gazans, Reuters reported.

Israel has vowed to annihilate the Hamas movement that controls Gaza after Hamas gunmen killed 1,300 people, mainly civilians, during a rampage through southern Israeli towns on Oct. 7, the deadliest single day in Israel’s 75-year history.

Israel has bombarded the Gaza Strip with airstrikes that have killed more than 2,800 Palestinians, a quarter of them children, and driven around half of the 2.3 million Gazans from their homes. It has imposed a total blockade on the enclave, blocking food, fuel and medical supplies, which are rapidly running out.

The peso strengthened due to dovish signals from a US Federal Reserve official, Mr. Ricafort added.

Federal Reserve Bank of Philadelphia President Patrick Harker said on Monday the central bank should not create new pressure on the economy by increasing the cost of borrowing, Reuters reported.

The Fed kept its key rate unchanged at the 5.25% to 5.5% range at its meeting last month.

It has hiked rates by a cumulative 525 basis points since it began its tightening cycle in March last year.

The US central bank will meet from Oct. 31 to Nov. 1 to revisit its policy stance.

For Wednesday, the trader said the peso could strengthen further amid a likely softer US retail sales report.

The trader expects the peso to move between PHP 56.60 and PHP 56.85 per dollar on Wednesday, while Mr. Ricafort sees it ranging from PHP 56.65 to PHP 56.85. — A.M.C. Sy with Reuters