Peso rises on good Asian macroeconomic indicators

MANILA, Philippines—The peso inched up back to the 42-to-a-dollar territory on Tuesday after temporarily slipping into the 43-level the previous day as favorable investor sentiment, resulting from encouraging macroeconomic indicators in Asia, offset the jitters caused by the debt woes in the Euro zone.

The local currency closed at its intraday high of 42.83 against the US dollar on Tuesday, up by 21 centavos from the previous day’s finish of 43.04:$1.

Intraday low settled at 42.97:$1. Volume of trade rose to $922.215 million from $845.82 million previously.

Traders said the appreciation of the peso, which mirrored the movement of other Asian currencies, came following the release of a statement from the Malaysian central bank projecting a positive growth for the Asian region as a whole.

Investors, likewise, expect interest rates in Asia to continue rising as central banks move to fight inflation. Higher interest rates are meant by central banks to temper inflation, but another consequence is an increase in yields of foreign portfolio assets.

Investors want to take advantage of the likely increase in yields in the months ahead, traders say, and so they buy Asia currency-denominated assets.

In the case of the Philippines, the market expects the Bangko Sentral ng Pilipinas to implement another liquidity tightening, one manner of which is interest-rate hike

So far this year, the BSP has raised interest rates twice by a total of 50 basis points. It likewise has raised the reserve requirement for banks from 19 to 20 percent of deposits.