The peso hit a new near two-month high against the dollar on Wednesday on growing expectations of a September rate cut by the US Federal Reserve.
The local unit closed at PHP 58.295 per dollar on Wednesday, strengthening by nine centavos from its PHP 58.385 finish on Tuesday, Bankers Association of the Philippines data showed.
This was the peso’s strongest close in almost two months or since its PHP 57.97-a-dollar finish on May 28.
The peso opened Wednesday’s session stronger at P58.33 against the dollar. Its intraday best was at its close of PHP 58.295, while its weakest showing was at PHP 58.40 versus the greenback.
Dollars exchanged went down to USD 1.24 billion on Wednesday from USD 1.42 billion on Tuesday.
“A softer dollar lifted the region’s currencies including the peso on the back of US rate cut bets and risk on sentiment overnight,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
The dollar was broadly weaker on Wednesday after a modest but short-lived boost following better-than-expected US retail sales data, as traders focused on the prospect of Federal Reserve rate cuts as early as September, Reuters reported.
The dollar index ticked marginally lower to 104.19. Investors have fully priced in a rate cut from the Fed come September and are expecting more than 60 basis points worth of easing by the yearend.
Dovish comments from the US central bank chief also boosted the peso, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Most players have squared their positions ahead of the Fed speakers overnight,” a trader said by phone.
For Thursday, the trader and Mr. Ricafort said they see the peso ranging from PHP 58.20 to PHP 58.40 per dollar. — AMCS with Reuters
This article originally appeared on bworldonline.com