Peso slips vs dollar as BSP resumes easing cycle

The peso slipped against the dollar on Thursday as players took positions following the Bangko Sentral ng Pilipinas’ (BSP) move to resume its easing cycle.

The local unit closed at PHP 57.35 per dollar on Thursday, weakening by four centavos from its PHP 57.31 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened the session sharply stronger at PHP 57.18 against the dollar. Its worst showing was at PHP 57.355, while its intraday best was at PHP 57.14 versus the greenback.

Dollars exchanged went down to USD 1.48 billion on Thursday from USD 1.97 billion on Tuesday.

“The dollar-peso initially traded higher on improving risk sentiment after US President Donald J. Trump announced the 90-day tariff pause,” a trader said in a phone interview.

“However, it [dropped] on expectations that the BSP will cut rates, which it did, and after the BSP signaled further rate cuts for the rest of the meetings,” the trader added.

The peso’s rally lost steam as players positioned before the BSP’s announcement of its policy decision later in the session, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.

The Monetary Board on Thursday cut benchmark interest rates by 25 basis points (bps) to bring the policy rate to 5.5%, as expected by all 17 analysts in a BusinessWorld poll.

BSP Governor Eli M. Remolona, Jr. said expectations of easing inflation support the shift to a more accommodative monetary policy stance.

He added that the Monetary Board is considering further rate cuts but maintained that these will be delivered in “baby steps” of 25 bps at a time.

“For now, what we’re looking at is a few more cuts, but we have more meetings than the number of cuts we are thinking about,” Mr. Remolona said.

The Monetary Board has four meetings left this year, which are scheduled for June 19, Aug. 28, Oct. 9, and Dec. 11.

For Friday, the trader expects the peso to move between PHP 57.10 and PHP 57.50 per dollar, while Mr. Ricafort sees it ranging from PHP 57.25 to PHP 57.45. — Aaron Michael C. Sy