MANILA, Philippines — The peso inched up on Tuesday amid expectations global liquidity would grow further, supported by low interest rates abroad.
Specifically, the rise of the peso came following reports the European Central Bank (ECB) is considering further reduction in interest rates and that the Reserve Bank of Australia cut its key policy rate to a record low of 2.75 percent.
The local currency closed at 40.87 against the US dollar, up by 4.5 centavos from the previous day’s finish of 40.915:$1.
Intraday high hit 40.86:$1, while intraday low settled at 40.935:$1.
Volume of trade amounted to $872.45 million from $976 million previously.
Traders said the interest rate cut implemented by the central bank of Australia as well as indications that the ECB is inclined to implement more measures to boost growth of the lackluster euro zone economy led to speculations that the resulting additional liquidity could further boost demand for emerging-market assets.
In turn, the speculations have pushed demand for emerging-market currencies, they said.
The appreciation of the peso likewise came following the decision of the Japan Credit Rating Agency Ltd. (JCR) to raise the Philippines’ credit rating by a notch from the minimum investment grade of BBB- to BBB.
JCR cited the country’s favorable macroeconomic fundamentals for its decision.
The new rating was assigned a “stable” outlook, which indicated probability that the rating would stay the same at least within the short term.