Peso recovers on dovish Fed bets
THE PESO rose against the dollar on Monday amid expectations that the US Federal Reserve would adopt a dovish stance at its policy review next week.
The local unit closed at P58.225 per dollar on Monday, strengthening by 9.5 centavos from its P58.32 finish on Friday, Bankers Association of the Philippines data showed.
The peso opened Monday’s session weaker than Friday’s close at P58.40 against the dollar. Its intraday best was its closing level of P58.225, while its worst showing was at P58.43 versus the greenback.
Dollars exchanged went down to $1.33 billion on Monday from $1.69 billion on Friday.
The peso recovered against the dollar on expectations of a dovish decision by the Fed next month, a trader said by phone.
Four Federal Reserve policy makers last week expressed support for further interest rate cuts, but appeared to differ on how fast or far they believe any cuts should go, Reuters reported.
Three of them, citing the strength of the economy and an uncertain outlook, expressed a preference for going slow, using words like “modest” and “gradual” to describe their views on the right pace for rate cuts.
The fourth, San Francisco Fed President Mary Daly, said she feels Fed policy is “very tight” and does not believe that a strong economy, as long as inflation continues to fall, should keep the central bank from continuing to reduce rates.
The remarks provide a small taste of what’s expected to be a broad but closed-door debate of the appropriate path for policy at the Fed’s upcoming policy meeting, on Nov. 6-7.
There was also some profit taking after the Bangko Sentral ng Pilipinas intervened when the peso reached the P58.40 level, the trader added.
Lower global crude prices recently also supported the peso, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
For Tuesday, the trader sees the peso moving between P58 and P58.50 per dollar, while Mr. Ricafort expects it to range from P58.10 to P58.30. — AMCS with Reuters