Peso returns to P55 level against dollar

Metro Manila, July 27 ------ The peso strengthened against the greenback anew as it returned to the P55-per-dollar level after two weeks.

The local currency closed at P55.30 versus the dollar from P56.10 recently, according to Bankers Association of the Philippines data. The last time the peso closed below the P56:$1 mark was on July 11 at P55.979. It then weakened to P56.37 the day after. The peso opened recent trading at P55.85, registering an intraday high of P55.88 and a low of P55.29.

Economists mainly cited central bank developments in the Philippines and the United States for the currency's stronger performance. "The peso's rank among Asian currencies has improved remarkably since July 14 so I still attribute the peso's turnaround mostly to the noticeable shift of the BSP's rhetoric. It changed noticeably from dyed-in-the-wool gradualism to a more flexible ready-to-hike-anytime tone," BPI lead economist Jun Neri told CNN Philippines. The Bangko Sentral ng Pilipinas has gradually turned aggressive against surging inflation. It initially announced a back-to-back quarter-percentage point or 25 basis points interest rate hike in May and June. It turned even more hawkish this month, announcing a three-quarter-point or 75 basis points rate hike ahead of its Aug. 19 policy meeting.

BSP Gov. Felipe Medalla hinted that an upward adjustment of a quarter or half point (25-50 basis points) is possible at the policy meeting next month. Meanwhile, UnionBank of the Philippines chief economist Carlo Asuncion cited the rate hikes expected from the US Federal Reserve along with "some forward guidance" from Fed chairman Jerome Powell. "Players are also looking into weaker-than-expected 2Q22 corporate earnings results with investors staying on the sidelines. It maybe that some investors are looking to emerging economies currencies and other assets as hedge for the mean time," Asuncion added. The disruptions to Europe's gas supplies and China's COVID-19 and real estate concerns may have also driven investors towards currencies of emerging economies like the Philippines', he further stated.

Source: cnnphilippines.com