Peso strengthens as Fed remarks drag greenback
THE PHILIPPINE PESO appreciated on Thursday after remarks from the US Federal Reserve chief dragged the dollar down.
It closed at P55.82 a dollar, five centavos stronger than a day earlier, according to Bankers Association of the Philippines data posted on its website.
The peso opened at P55.77 a dollar, weakened to as much as P55.90 and strengthened to as much as P55.75 against the greenback.
Dollars exchanged went up to $932.05 million from $905.5 million on Wednesday.
The peso gained as the dollar generally weakened, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.
“The dollar drifted lower overnight after US Federal Reserve Chairman Jerome H. Powell’s statements,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said in a Viber message. “He said progress against inflation was not assured, but acknowledged the US Fed is ready to cut interest rates later this year.”
The dollar slipped across the board on Wednesday. The dollar index, which measures the currency’s strength against a basket of six currencies, was down by 0.41% at 103.36.
The Fed raised borrowing costs by 525 basis points from March 2022 to July 2023 to 5.25-5.5%.
Lower US treasury yields, which also dipped after Mr. Powell’s remarks, also supported the peso, Mr. Asuncion said.
Wall Street followed world shares to a higher close on Wednesday and the benchmark US Treasury yield dipped to a one-month low after the Fed chief reassured investors that while inflation is not quite tamed, rate cuts can be expected this year, Reuters reported.
All three major US stock indexes closed well below session highs, marking a partial rebound from Tuesday’s steep sell-off. The tech-heavy Nasdaq enjoyed the most robust gain.
Yields on 10-year US Treasuries hit a one-month low.
Mr. Asuncion expects the peso to trade from P55.70 to P56 a dollar on Friday, while Mr. Ricafort sees it a P55.75 to P55.95. — Aaron Michael C. Sy