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THE GIST
NEWS AND FEATURES
Global Philippines Fine Living
INSIGHTS
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
THE BASICS
Investment Tips Explainers Retirement
WEBINARS
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
DOWNLOADS
equities-3may23-2
Consensus Pricing
Consensus Pricing – June 2025
June 25, 2025 DOWNLOAD
Two people discussing a chart on a tablet
Economic Updates
Policy Rate Update: Dovish BSP Narrows IRD 
June 19, 2025 DOWNLOAD
grocery-2-aa
Economic Updates
Inflation Update: Prices rise even slower in May 
June 5, 2025 DOWNLOAD
View all Reports
BusinessWorld 2 MIN READ

Peso strengthens after China rate cut

February 21, 2024By BusinessWorld
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The peso inched up against the dollar on Tuesday after China’s central bank cut its key loan rate.

The local unit closed at PHP 56.035 per dollar on Tuesday, strengthening by 3.5 centavos from its PHP 56.07 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Tuesday’s session weaker at PHP 56.09 against the dollar. Its worst showing was at PHP 56.135, while its intraday best was its closing level of PHP 56.035 versus the greenback.

Dollars exchanged went down to USD 1.14 billion on Tuesday from USD 1.51 billion on Monday.

“The peso appreciated as the latest substantial policy rate cut from China signaled concerns on the Chinese economy,” a trader said in an e-mail.

China announced its biggest-ever reduction in the benchmark mortgage rate on Tuesday, as authorities sought to prop up the struggling property market and broader economy, Reuters reported.

The 25-basis-point (bp) cut to the five-year loan prime rate (LPR) was the largest since the reference rate was introduced in 2019 and far more than analysts had expected.

The five-year LPR was lowered by 25 basis points to 3.95% from 4.2% previously, while the one-year LPR was left unchanged at 3.45%.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.

In a Reuters poll of 27 market watchers conducted this week, 25 expected a reduction to the five-year LPR. They projected a cut of five to 15 bps.

The deeper-than-expected cut also suggests Beijing is no longer as concerned about the negative effects of lower lending rates on the currency or banks as they were last year.

A central bank-backed newspaper said on Tuesday that the benchmark mortgage rate cut would not create a negative impact on banks’ net interest margins.

The peso strengthened on Tuesday amid the dollar’s recent weakness, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The local unit was also supported by the stock market’s rebound on Tuesday, he added.

The Philippine Stock Exchange index rose by 0.82% or 56.05 points to close at 6,854.66 on Tuesday, while the broader all shares index went up by 0.53% or 19.09 points to finish at 3,581.70.

For Wednesday, the trader sees the peso moving between PHP 55.95 and PHP 56.20 versus the dollar, while Mr. Ricafort expects it to trade from PHP 55.93 to PHP 56.13. — AMCS with Reuters

This article originally appeared on bworldonline.com

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