Peso ends at strongest level in nearly four months
The Philippine peso on Friday closed at 55.74:$1, its strongest position against the greenback in nearly four months after government efforts, both through policy rate hikes and market interventions, to stabilize the local currency produced the desired results.
This also happened as the correction on the US dollar played out longer with the United States Federal Reserve giving less hawkish signals lately.
ING Bank said in a commentary the US dollar further depreciated as US Fed chair Jerome Powell gave hints that the American central bank would probably shift to a slower pace of rate hikes this December.
This seems to have firmed up expectations that the US Fed’s upcoming rate hike would be at 0.5 percentage point instead of the 0.75 ppt seen in previous increases.
The Dutch banking giant also noted that a softening of China’s Covid policy was also helping emerging market currencies.
On Friday, the peso appreciated by 48 centavos from 56.22:$1 on Dec. 1, the strongest since closing at 55.61:$1 last Aug. 12.
In an interview with Bloomberg TV, Bangko Sentral ng Pilipinas Governor Felipe Medalla said the peso has been moving similarly to “all other currencies” with respect to the US dollar.
Medalla said that the peso lost 15 percent of its value from 51:$1 at the end of 2021 up to August.
The peso’s year-to-date depreciation is “now below 10 percent (and) a lot more manageable than 15, 16, or 17 percent,” he said.
The BSP chief added that people in the foreign exchange market had been caught unawares, expecting the peso to depreciate further instead of appreciating.
“So I guess that will make the speculators a lot less aggressive,” Medalla said. “And actually, there were days when we were doing some buying [of US dollars]. Before, everyday was a selling day.”
Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the peso had been firming up ahead of the expected seasonal increase in remittances from overseas Filipino workers and conversion to pesos before the holiday season.
Ricafort said the US dollar weakened against other major global currencies to new five-month lows, following softer readout of US economic data, such as the contraction of the manufacturing sector for the first time since May 2020.
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