THE PESO recovered against the dollar on Thursday as both the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) kept rates unchanged at their policy meetings.
The local unit closed at P55.795 per dollar on Thursday, strengthening by 26 centavos from P56.055 on Wednesday, based on Bankers Association of the Philippines data.
The peso opened Thursday’s session at P55.75 against the dollar. Its intraday best was at P55.62, while its worst showing was at P55.80 versus the greenback.
Dollars exchanged went down to $1.48 billion on Thursday from $1.6 billion on Wednesday.
“Today, the pair tapered off as volatility overnight saw the dollar weaken after the US Fed held rates steady while signaling that their next move will be rate cuts,” Security Bank Corp. Chief Economist Robert Dan J. Roces likewise said in a Viber message on Thursday.
The US central bank kept the fed funds rate steady at the 5.25%-5.5% range for a third straight time during its Dec. 12-13 meeting, with Fed Chair Jerome H. Powell saying they are likely done hiking borrowing costs.
The Fed raised rates by a total of 525 basis points (bps) from March 2022 to July 2023.
The peso was supported by the BSP’s hawkish rhetoric after its meeting on Thursday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The BSP on Thursday kept its policy rate steady at a 16-year high of 6.5% for a second straight meeting, as expected by 15 of 17 analysts in a BusinessWorld poll last week, but said they remain cautious amid lingering upside risks to inflation.
The Monetary Board has raised benchmark interest rates by 450 bps since it began its tightening cycle in May 2022.
For Friday, Mr. Roces said the peso could continue to get a lift from the BSP’s hawkish stance. He expects the peso to move between P55.50 and P55.80, while Mr. Ricafort sees it ranging from P55.70 to P55.90. — A.M.C. Sy