Peso rises on news of extended stimulus by US Federal Reserve
MANILA, Philippines—The peso climbed on Tuesday amid speculations that the US Federal Reserve would continue with its stimulus program for an extended period.
The local currency closed at 40.735 against the US dollar, up by 17.5 centavos from the previous day’s finish of 40.91:$1.
Intraday high hit 40.71:$1, while intraday low settled at 40.91:$1.
Volume of trade reached $1.16 billion from $1.2 billion previously.
Traders said some fund owners have been expecting the US Fed to continue with its third round of stimulus through bond purchases, called quantitative easing 3 (QE3), beyond this year. An extended period of stimulus is expected to boost global liquidity, some of which are believed to go to emerging markets like the Philippines in the form of portfolio investments.
A rise in inflow of foreign capital to the Philippines is seen to boost the peso and yields of peso-denominated securities. As such, yield-seeking investors were urged to take advantage of the potential income opportunity by purchasing pesos and peso-denominated assets.
The rise of the peso on Tuesday came with the increase in the Philippine Stock Exchange Index. The PSEi rose by 42.31 points to 6,234.73.
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