THE PESO rebounded against the dollar on Wednesday on profit taking and remarks from the US Federal Reserve chief.
The local currency closed at PHP 54.80 versus the greenback on Wednesday, strengthening by 28.5 centavos from Tuesday’s PHP 55.085 finish, data from the Bankers Association of the Philippines showed.
The peso opened Wednesday’s trading session at PHP 55 per dollar. Its weakest showing was at P55.02, while its intraday best was at PHP 54.79 against the greenback.
Dollars traded went down to USD 1.147 billion from USD 1.274 billion on Tuesday.
“The peso appreciated on profit taking after the local currency weakened substantially [on Tuesday] following the [higher] local inflation in January,” a trader said in a Viber message.
The peso gained as the dollar weakened after Fed chair Jerome H. Powell signaled that interest rates might need to move higher than expected to quell inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Against a basket of currencies, the dollar index fell 0.19% to 103.1 on Wednesday, after slipping 0.3% in the previous session.
In a question-and-answer session before the Economic Club of Washington on Tuesday, Mr. Powell said rates might need to move higher than expected if the economy remained strong, but said he felt a process of “disinflation” is already underway.
The US central bank last week hiked its fed funds rate by 25 basis points (bps) to a range between 4.5% and 4.75%. This brought cumulative increases since March 2022 to 450 bps.
For Thursday, Mr. Ricafort sees the peso trading between PHP 54.60 and PHP 54.90 against the dollar, while the trader gave a forecast range of PHP 54.70 to PHP 54.95. — AMCS
This article originally appeared on bworldonline.com