Peso rises anew on reports US Fed to pump in more stimulus funds
By Michelle V. RemoPhilippine Daily Inquirer
MANILA, Philippines—The peso inched up on Thursday as reports that the US Federal Reserve would likely inject more stimulus funds to the world’s biggest economy lifted investor sentiment and boosted their appetite for emerging-market assets.
The local currency closed at 42.53 against the US dollar, up by 14.5 centavos from the previous day’s finish of 42.675:$1.
Intraday high hit 42.52:$1, while intraday low settled at 42.655:$1. Volume of trade amounted to $654.88 million from $631.5 million previously.
Traders said the increase in the peso, which reflected movement of other key Asian currencies, was due largely to the favorable sentiment created by a statement from US Fed Chairman Ben Bernanke that the monetary authority of the United States is open to implementation of further measures to stimulate the US economy if deemed necessary.
Injection of funds by the US Fed, usually done through its purchases of bonds, is seen to increase available liquidity globally. Portions of this liquidity are used by investors to purchase portfolio instruments from emerging markets, such as the Philippines.
Higher foreign investments in peso-denominated assets are seen to prop up the value of the peso in the future, and yield-seeking investors wanted to take advantage of the potential earning opportunity by investing now in Philippine portfolio assets.
Consequently, traders said, the peso and regional currencies appreciated even if the actual injection of US stimulus funds is yet to happen.
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Tags: business and finance , currencies , economy , Foreign Exchange , Philippine peso , US dollar
