Peso edged higher against dollar as surprise rate hike bolsters market sentiment

THE PESO edged higher against the dollar on Monday as the central bank’s surprise rate hike last week continued to boost market sentiment. — BW FILE PHOTO

THE PESO rose slightly against the greenback on Monday after the off-the Bangko Sentral ng Pilipinas (BSP) cycle ride last week and amid falling local pump prices.

The local unit closed at 56.35 pesos to the dollar on Monday, moving away from its finish of 56.36 pesos on Friday, according to data from the Philippine Bankers Association.

The Peso opened Monday’s session stronger than its Friday close at P56.30 against the Dollar. Its low for the day was at P56.39, while the peso’s intraday best was at P56.27 against the greenback.

Traded dollars fell to $561.75 million on Monday from $678.3 million on Friday.

“The peso appreciated slightly from the lingering impact of last week’s sharp BSP rate hike,” one trader said in a Viber message.

The BSP, in an off-cycle, raised its benchmark interest rates by a record 75 basis points on Thursday amid growing risks forflation.

BSP Governor Felipe M. Medalla said the “significant” rise was due to signs of “sustained and mounting price pressures” as well as contagion effects from aggressive tightening in other countries. , such as the United States, amid global inflation concerns.

On Friday, Medalla said he would not rule out another interest rate hike in the Monetary Board’s August review, although the need for a 50bp hike at that meeting is ” much less now” after their off– cyclic displacement.

Title inflation was at a nearly four-year high of 6.1% in June, beating the central bank’s 2-4% target for a third consecutive month. This brought the IfH1 average of 4.4%, still below BSP’s 5% annual forecast.

The peso also strengthened following news of a third straight round of local pump price cuts, the chief economist at Rizal Commercial Banking Corp said Monday. Michael L. Ricafort in a Viber message.

“Market sentiment was also supported by a further decline in local fuel pump prices, as global oil prices remained among two-month lows recently, as well as the recent easing in yields. from the US Treasury amid US recession fears and weaker economic data in China recently due to some shutdowns. /COVID concerns,” Ricafort said.

Oil companies announced that fuel prices would be lowered again on Tuesday July 19, marking the third consecutive week of price cuts.

“The peso is also slightly stronger after the upward correction in the PSEi (considered a healthy upward correction after falling for 4 consecutive trading days),” Ricafort said.

The Philippines Stock Exchange index rose 73.52 points or 1.18% to close at 6,268.78 on Monday, while the broader all-stock index rose 24.33 points or 0, 72% at 3,370.06.

For Tuesday, the trader said that “the local currency could appreciate tomorrow ahead of a potentially strong Eurozone inflration report.

Both the trader and Mr. Ricafort gave a forecast range of 56.20 to 56.40 pesos per dollar for Tuesday. — Keisha B. Ta-asan

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