Home Economy Peso rallies to near 1-month high vs dollar

Peso rallies to near 1-month high vs dollar

by
BW FILE PHOTO

THE PESO rose to a near one-month high against the dollar on Thursday due to soft US data and dovish comments from the US Federal Reserve’s June meeting that boosted bets of a rate cut within the year.

The local unit closed at P58.58 per dollar on Thursday, strengthening by 14.5 centavos from its P58.725 finish on Wednesday, Bankers Association of the Philippines data showed.

This was the peso’s strongest finish in almost a month or since its P58.52-a-dollar close on June 7.

The peso opened Thursday’s session stronger at P58.63 per dollar. Its weakest showing was at P58.695, while its intraday best was its close of P58.58.

Dollars exchanged rose to $1.01 billion on Thursday from $779.72 million on Wednesday.

The peso was supported by a broadly weaker dollar due to weak US data and dovish comments from the Fed, a trader said in a phone interview.

Softer-than-expected US data could strengthen the case for Fed cuts this year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar was on the back foot on Thursday after US economic data continued to point to slowing growth, offering limited relief to the yen, which remained pinned near a 38-year low that had the market on alert for government intervention, Reuters reported.

The dollar index, which measures the greenback against a basket of peer currencies, was close to flat at 105.32 after briefly weakening to its lowest since June 13 at 105.04 on Wednesday.

Softer-than-expected US economic data on Wednesday, including a weak services report and ADP employment report, depicted a slowing economy, following an increase in initial applications for unemployment benefits last week.

Minutes of the Fed’s June meeting acknowledged the US economy appeared to be slowing and “price pressures were diminishing.”

The string of weaker economic data had markets pricing in about a 68% chance of a US rate cut in September versus 56% a week ago, according to the CME FedWatch tool.

For Friday, the trader expects the peso to move between P58.40 and P58.80 per dollar, while Mr. Ricafort sees it ranging from P58.50 to P58.70. — AMCS with Reuters

Related News