The peso rebounded against the dollar on Tuesday due to dovish hints from US Federal Reserve officials.
The local currency closed at PHP 56.82 versus the dollar on Tuesday, strengthening by 13 centavos from Monday’s PHP 56.95 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Tuesday’s session at PHP 56.90 per dollar. Its intraday best was at PHP 56.82, while its weakest showing was at PHP 56.92.
Dollars traded went down to USD 1.05 billion on Tuesday from USD 1.25 billion on Monday.
“The peso strengthened amid dovish signals by some Fed officials who urged caution over further US policy rate hikes,” a trader said in an e-mail.
Top-ranking Fed officials indicated that rising yields on long-term US Treasury bonds, which directly influence financing costs for households and businesses, could steer the Fed from further increases in its short-term policy rate, Reuters reported
The Fed kept its target rate unchanged at the 5.25% to 5.5% range at its Sept. 19-20 meeting.
It has hiked rates by a cumulative 525 basis points since it began its tightening cycle in March last year.
The Federal Open Market Committee will next meet from Oct. 31 to Nov. 1 to review policy.
The dollar’s weakness boosted the peso, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.
The dollar was steady on Tuesday and below recent highs as comments by US Federal Reserve officials dampened rate hike expectations, although investors kept an eye on the conflict between Israel and the Palestinian Islamist group Hamas, Reuters reported.
The dollar index, which tracks the greenback against six peers, was last up less than 0.1% at 106.05. It remained below last week’s 11-month high of 107.34 and traded at roughly the same position as a week earlier.
For Wednesday, the trader and Mr. Ricafort see the peso moving between PHP 56.70 and PHP 56.90 per dollar. — with Reuters