Peso steady vs dollar

The peso closed unchanged against the dollar on Monday amid the ongoing war in the Middle East and expectations of monetary tightening at home.

The local currency closed at PHP 56.84 versus the greenback on Monday, steady from Friday’s finish, data from the Bankers Association of the Philippines’ website showed.

The peso opened Monday’s session stronger at PHP 56.75 per dollar. Its intraday best was at PHP 56.72, while its weakest showing was at PHP 56.87 against the greenback.

Dollars traded rose to USD 950.5 million on Monday from USD 912.27 million on Friday.

“The dollar slightly corrected lower versus major global currencies after some mixed developments related to the Israel-Hamas war lately,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Japan’s yen weakened briefly on Monday to the 150-per-dollar level, as elevated US Treasury yields kept the dollar supported across the board but without pushing it too much higher, Reuters reported.

Investors are waiting for several events this week, including the European Central Bank meeting, and the release of US gross domestic product data and the US Federal Reserve’s preferred inflation gauge.

Besides that, the risk of Israel’s war on the Islamist group Hamas becoming a wider regional conflict is keeping markets on edge, as Israeli airstrikes battered Gaza early on Monday, and the United States dispatched more military assets to the region.

The dollar index firmed a fraction to 106.23, with the euro down 0.1% at PHP 1.0586.

“The peso closed unchanged today as market participants weigh on the possibility of a BSP (Bangko Sentral ng Pilipinas) rate hike before yearend,” a trader said in an e-mail.

The central bank may hike its policy rate by 25 basis points (bps) during their Nov. 16 meeting after inflation picked up for a second month in a row in September, BSP Governor Eli M. Remolona, Jr. said earlier this month.

The Monetary Board has kept the policy rate at a near 16-year high of 6.25% at its last four meetings. It raised borrowing costs by 425 bps from May 2022 to March 2023 to help bring down inflation.

For Tuesday, Mr. Ricafort sees the peso ranging from PHP 56.75 to PHP 56.95 per dollar, while the trader expects it to move between PHP 56.70 and PHP 56.90. — MJBP with Reuters