THE PESO climbed to a seven-month high against the dollar on Tuesday on expectations of discussions of a pause in tightening at the US Federal Reserve’s review next week.
The local currency closed at PHP 54.435 versus the greenback on Tuesday, climbing by 10.5 centavos from Monday’s PHP 54.54 finish, data from the Bankers Association of the Philippines showed.
This is the peso’s best close in over seven months or since it finished at PHP 54.265 on June 21, 2022.
The peso opened Tuesday’s trading session at PHP 54.60 per dollar. Its weakest showing was at PHP 54.64, while its intraday best was at PHP 54.39 against the greenback.
Dollars traded went down to USD 1.052 billion from USD 1.24 billion on Monday.
“The peso strengthened amid reports of a potential discussion regarding when the US central bank will stop raising rates in its upcoming February meeting,” the trader said.
Slower US consumer inflation and other weak data released in recent weeks, as well as dovish comments from central bank officials, have fueled bets that the Fed could dial back its tightening, with a 25-basis-point (bp) hike seen in its first meeting of the year to be held on Jan. 31 to Feb. 1.
The US central last month hiked its federal funds rate by just 50 bps to a 4.25%-4.5% range following four straight 75-bp increases. This brought cumulative hikes for 2022 to 425 bps.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso rose amid a broadly weaker dollar.
The US dollar index — which measures the greenback against a basket of six major currencies — fell 0.1% to 101.93 on Tuesday, heading back towards the seven-and-a-half month low of 101.51 reached last week, Reuters reported.
Mr. Ricafort added that the peso strengthened ahead of the release of the fourth-quarter and full-year 2022 Philippine GDP report on Thursday.
For Wednesday, Mr. Ricafort sees the peso moving between PHP 54.35 and PHP 54.55 a dollar, while the trader sees it trading at PHP 54.30 to PHP 54.55. — AMCS
This article originally appeared on bworldonline.com