THE PESO continued to strengthen against the dollar on Thursday amid signals of less aggressive tightening by the US Federal Reserve and on data showing the Philippines saw a net “hot money” inflow in October.
The local unit closed at P56.78 per dollar on Thursday, gaining 16 centavos from its P56.94 finish on Wednesday, based on Bankers Association of the Philippines data.
The peso opened Thursday’s session at P56.88 per dollar, which was also its weakest showing. Meanwhile, its intraday best was at P55.79 against the greenback.
Dollars exchanged rose to $870.5 million on Thursday from $687.85 million on Wednesday.
“The peso appreciated significantly after the Fed minutes indicated that US central bank officials might need additional but softer rate hikes in future meetings,” a trader said in an e-mail.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said the local currency strengthened on the back of hints of smaller rate hikes from the Fed.
Minutes of the Fed’s policy meeting this month where they delivered a fourth straight 75-basis-point (bp) hike showed a “substantial majority” of policy makers agreed it would soon be appropriate to look at smaller increases.
The US central bank has raised rates by 375 bps since March in its fight versus inflation, bringing the fed funds rate to a 3.75-4% range. Its next meeting is on Dec. 13-14.
Mr. Ricafort added that the peso was also supported by strong hot money data.
Foreign portfolio investments posted a net inflow of $83 million in October, based on data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday.
This was an improvement from the $367.3-million net outflow recorded in September and the $221.11-million net outflow in the same month a year earlier.
For Friday, both the trader and Mr. Ricafort said that the peso might move between P56.70 and P56.90 against the dollar. — Luisa Maria Jacinta C. Jocson