Peso strengthens, returns to P51:$1
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Wed, 27 Feb 2019 16:23:57 +0000
THE peso returned to the P51:$1 level on Wednesday, hitting a nine-month high on optimism of a continued pause in US interest rates.
The currency, which opened at P52.00 against the greenback and rose to as high as P51.90 during the day, closed up 11 centavos at P51.91:$1, its highest since a P51.80:$1 finish on May 10 last year.
Michael Enriquez, chief investment officer of Sun Life Financial Philippines, said a strengthening was expected given dovish statements on Tuesday from US Federal Reserve Chairman Jerome Powell.
“This has made the USD weaker against Asian currencies. Also, the positive development on the trade war has made the yuan stronger,” Enriquez said in a message.
In a commentary, Metropolitan Bank & Trust Co.’s (Metrobank) Treasury department said “Powell reiterated a more patient outlook on monetary policy as he told a Senate Panel that the US economy is healthy and has no inflation pressure but is however faced with some ‘cross currents and conflicting signals’.”
“Powell’s comments showed no bias towards further interest rate increases or cuts and shows that the US Federal Reserve is looking to take a more patient approach with regards to interest rates,” it added.
Meanwhile, Union Bank of the Philippines chief economist Ruben Carlo Asuncion attributed the stronger peso to “the central bank’s continuing efforts to beef up its dollar reserves.”
The country’s gross international reserves stood at a 20-month high of $82.132 billion in January based on latest official data.
Asuncion suggested that a summit in Hanoi between US President Donald Trump and North Korean leader Kim Jong Un also encouraged the market.
“Long-term prospects of peace in the region are looking positive,” he said.
Reports have said that Trump and Kim could formally declare an end to Korean War, which ran from 1950 to 1953 but is technically still on as peace talks only resulted in a ceasefire.
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