The peso appreciated further against the dollar on Thursday following dovish signals from minutes of the US Federal Reserve’s meeting last month.
The local currency closed at PHP 56.66 versus the dollar on Thursday, strengthening by 9.5 centavos from Wednesday’s PHP 56.755 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Thursday’s session stronger at PHP 56.70 per dollar. Its intraday best was at PHP 56.66, while its weakest showing was at PHP 56.80 against the greenback.
Dollars traded went up to USD 1.25 billion on Thursday from the USD 1.19 billion on Wednesday.
The peso strengthened on Thursday amid dovish signals from the US central bank, as seen in the minutes of its Sept. 19-20 meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
A growing sense of uncertainty around the path of the US economy, with volatile data and tightening financial markets posing risks to growth, pushed Federal Reserve policy makers into a newly cautious stance last month, a position reaffirmed by top US central bank officials in a series of statements this week, Reuters reported.
Minutes of the Fed’s Sept. 19-20 meeting showed policy makers wrestling with risks they agreed were no longer just about inflation, with world energy and food markets perhaps threatening a new surge in prices, but slowing global growth, labor strikes and tightening financial markets possibly clamping down on the economy in unexpected, and job-killing ways.
The point was amplified by comments this week from top Fed officials who noted that the recent rise in US Treasury yields may well take the place of further increases in the policy rate, serving to slow the economy, and inflation, beyond any further central bank action.
The US central bank agreed at its meeting last month to hold rates steady even as a 12-7 majority indicated in new projections that one more hike might be needed by the end of the year to ensure inflation returns to the Fed’s 2% goal.
Investors since that meeting have steadily discounted the likelihood of any further hikes. After the release of the minutes on Wednesday, they gave a less than 10% chance of an increase in the policy rate at the Oct. 31-Nov. 1 meeting and a roughly 26% chance at the Dec. 12-13 session, according to CME Group’s FedWatch Tool.
The peso was also supported by the continued easing of global crude oil prices on Thursday, Mr. Ricafort said.
For Friday, Mr. Ricafort sees the peso ranging from PHP 56.55 to PHP 56.75 per dollar. — with Reuters
This article originally appeared on bworldonline.com