Peso strengthens to four-month high

THE PESO appreciated to a four-month high against the dollar on Monday following remarks from US Federal Reserve Chair Jerome H. Powell and ahead of the release of November Philippine inflation data.

The local unit closed at P55.34 per dollar on Monday, strengthening by six centavos from its P55.40 finish on Friday, Bankers Association of the Philippines data showed.

This was the peso’s strongest close in more than four months or since its P55.19-per-dollar finish on Aug. 2.

The peso opened Monday’s session stronger at P55.34 against the dollar, which was also its closing level. Its intraday best was at P55.22, while it went down to as low as P55.37 versus the greenback.

Dollars exchanged inched down to $1.11 billion on Monday from $1.18 billion on Friday.

“The peso appreciated after Fed Chairman Powell echoed his prior cautious guidance on future policy adjustments,” a trader said in an e-mail.

The risks of the Federal Reserve slowing the economy more than necessary have become “more balanced” with those of not moving interest rates high enough to control inflation, Mr. Powell said on Friday, reaffirming the US central bank’s intent to be cautious but also offering fresh optimism on its progress so far, Reuters reported.

The Fed will next meet on Dec. 12-13 to review policy.

The peso was also supported by expectations of slower Philippine headline inflation in November, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

A BusinessWorld poll of 15 analysts conducted last week yielded a median estimate of 4.4% for November inflation, at the midpoint of the Bangko Sentral ng Pilipinas’ 4% to 4.8% forecast for the month.

The Philippine Statistics Authority will release the November inflation report on Tuesday.

For Tuesday, the trader said the peso could strengthen further against the dollar on the back of better inflation data.

The trader expects the peso to move between P55.20 and P55.50 a dollar on Tuesday, while Mr. Ricafort sees it ranging from P55.25 to P55.45. — A.M.C. Sy with Reuters