Peso may be further strengthened The dollar was violated this week ahead of scheduled speeches by the head of the U.S. Federal Reserve and major U.S. economic data.
The Philippine Bankers Association showed that local departments completed 33.5 Centavos at a price of P55.25 per dollar on Friday, from P55.585 on Thursday.
This is the strongest result in the nearly 22 months since the Peso closed on August 2, 2023.
The week after week, the peso received 38.5 Centavos from the end of P55.635 on May 16.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message that the surge in peso on Friday received the latest tax rate signal from the Sentral Ng Pilipinas (BSP) in Bangkok.
“This can be attributed to the combination of positive sentiment in the U.S. tariff truce, and BSP and soft inflation data help regulate expectations for further tightening,” said John Paolo R. Rivera, a researcher at the Philippine Development Institute, similarly in a Wiber message Friday.
BSP Governor Eli M. Remolona, Jr. Friday said the Monetary Commission could lower it twice this year and the next table was lowered next month.
“Maybe there are two more cuts. Given our knowledge of what happened, it’s not necessarily 25 basis points in a row (bps).” “The hard part is that we don’t know. For most central banks, this is the new area. It’s the most uncomfortable part.”
He said loose inflation allowed them to cut “enough space”, although they don’t want to cut “too much” as this could be repriced.
The Monetary Commission in April lowered the benchmark interest rate by 25 basis points, raising the policy rate to 5.5%. It has now reduced borrowing costs by 100 basis points since its mitigation cycle began last August.
Four Monetary Commission policy meetings are scheduled to be held this year in June, October, October and December.
Mr Ricafort said PESO could stay strong overnight before Fed Chairman Jerome H. Powell delivered an overnight speech and released minutes at his April meeting on Wednesday.
Releases of the latest estimates for the first quarter of the U.S. GDP and Thursday’s personal consumption expenditure price index could also drive department store merchandise trading this week.
“The key factors to focus on will be global market sentiment following U.S. tariffs, upcoming U.S. inflation and employment data, as well as local follow-ups starting with April inflation and tips from BSP,” Mr Rivera added.
Mr Ricafort saw the peso move between p55 and P55.50 this week, while Mr Rivera said it could maintain p55 levels with a slight enhancement of bias. – Aaron Michael C.
