MANILA, Philippines?The peso rose further on Thursday following the announcement by the US Federal Reserve of a new stimulus plan to boost the rather anemic growth of the US economy.
The local currency closed at 42.53 against the US dollar on Thursday, up by 6 centavos from the previous day's finish of 42.59.
Intraday high reached 42.5:$1, while intraday low settled at 42.55:$1, which was still higher than the previous day's finish. Volume of trade amounted to $984.69 million, up from $964.14 million on Wednesday.
Traders said Thursday's rise of the peso, now at its highest in about two-and-a-half years, was a consequence of the announcement by the US Federal Reserve that it would pump more money into the US economy.
In particular, the US Fed intends to buy as much as $900 billion in bonds over the next eight months.
A portion of the additional liquidity in the US economy is expected to be shifted to Asia, including the Philippines, in the form of investments in stocks and other portfolio assets.
Market players say expectations that Asian currencies would rise in the months and weeks ahead are becoming self-fulfilling, as investors want to generate profit by investing more in Asian currencies.
Monetary officials have expressed concern over the stimulus measure by the US Fed, saying the sharp rise of the peso is destabilizing. The influx of foreign capital into Asia is feared to eventually cause asset price bubbles in the region.