THE PESO climbed to a new three-month high versus the dollar on Monday following hawkish comments from the Bangko Sentral ng Pilipinas (BSP) chief.
The local currency closed at P54.38 against the dollar on Monday, inching up by two centavos from Friday’s P54.40 finish, data from the Bankers Association of the Philippines’ website showed.
This was the peso’s strongest finish since it closed at P54.36 a dollar on March 31.
The local unit opened Monday’s session weaker at P54.44 per dollar. Its worst showing for the day was at P54.51, while its intraday best was at P54.30 against the greenback.
Dollars traded went down to $977.4 million on Monday from the $1.15 billion seen on Friday.
The peso was supported by hawkish comments from BSP Governor Eli M. Remolona, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso appreciated after BSP Governor Remolona remarked that any local policy rate cuts remain premature this year,” a trader likewise said in an e-mail.
The central bank remains on the “tightening side” as it monitors upside risks to inflation, including El Niño and wage hikes, Mr. Remolona said in a Bloomberg Television interview on Friday.
“For now, we’re contemplating whether to hike or not to hike,” he told Bloomberg TV’s Kathleen Hays on Saturday. “We’re not thinking about whether to cut or not to cut.”
Mr. Remolona added that the central bank is also watching out for any immediate effects the US Federal Reserve’s tightening cycle has on the peso.
The BSP has held its key rate at a near 16-year high of 6.25% for two straight meetings after hiking by a cumulative 425 basis points.
Its next policy meeting is on Aug. 17.
For Tuesday, the trader said the peso could weaken due to recession concerns after a weaker Chinese gross domestic product (GDP) report for the second quarter.
China’s GDP grew 0.8% in the second quarter from the previous quarter on a seasonally adjusted basis, versus the 2.2% expansion in the January-March period.
Year on year, GDP expanded 6.3% in the second quarter, faster than the 4.5% growth logged in the previous three-month period.
The trader sees the peso moving between P54.30 and P54.55 per dollar on Tuesday, while Mr. Ricafort expects it to range from P54.30 to P54.50. — A.M.C. Sy with Bloomberg