Peso gained as markets awaited Fed clues | Inquirer Business
Local currency up three consecutive days

Peso gained as markets awaited Fed clues

The Philippine peso gained a bit of ground from the US dollar this week along with other Asian currencies, which rallied against the greenback as financial markets await news on the outlook on the American economy.

The local currency appreciated in three consecutive trading days to close at 56.02:$1 on Aug. 26 from 56.21:$1 on Aug. 22.

In a commentary, United Overseas Bank said the recent US dollar rally took a breather again as markets awaited United States Federal Reserve chair Jay Powell’s speech on Friday night, Philippine time.


Powell was expected to give hints about any policy rate hike in September. Before this, American central bank officials had stressed the need to keep raising interest rates.


ING Bank observed that recent comments by US Fed officials “largely fell on the hawkish side.”

The bank based in The Netherlands said markets would be scanning Powell’s speech on topics such as inflation, growth outlook, front-loading of rate hikes and any hint of monetary policy easing in 2023.

“All these factors can play a different role in driving the reaction in the [foreign exchange] market, although we see a quite elevated risk that Powell may end up broadly matching the generally hawkish market expectations and avert any significant market shock,” ING Bank said.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the peso has lost more than 10 percent of its value to the US dollar since the start of this year, especially in July when the peso touched its historic weakest of 56.45:$1 during intraday trading.

He said the peso has since firmed up since then, but the dollar’s gain has increased the attractiveness for foreign investors that opt to convert US dollars to pesos and purchase Philippine investments.

This is so “especially those [investments that are] at relatively bargain levels, such as local stocks, government securities, and other investments assets,” he said.

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TAGS: currencies, Philippine peso, US dollar

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