Push Admin

Peso closes at P54.87 vs US dollar, strongest since June last year

Article (news)

ABS-CBN News

MANILA (UPDATE) - The Philippine peso continued to claw back losses from last year as it again strengthened on Tuesday and broke through the P54 to the dollar level. Data from the Bankers Association of the Philippines showed the peso closing at P54.87 to the US dollar on Tuesday after closing at P55.11 on Monday. This was the local currency’s strongest level since June 30 last when it closed at 54.975. From then on it steadily began to slip before closing at a<a href="https://news.abs-cbn.com/business/10/03/22/peso-sinks-to-new-record-low-of-p59-to-1"> historic low</a> of P59 to the dollar on Oct. 3. Intervention by the Bangko Sentral ng Pilipinas as well as a rise in remittances from overseas Filipinos in time for the Christmas holidays however boosted the peso, and it has made big gains since then.Last December, Bangko Sentral ng Pilipinas Governor Felipe Medalla said the <a href="https://news.abs-cbn.com/business/12/20/22/bsp-worst-over-for-strong-dollar">worst was over</a> for the Philippine peso as it keeps regaining strength versus the dollar.Year-on -year however, the peso is still down compared to its P51.31 close on Jan. 10, 2022. In an interview on Tuesday, Medalla said the Monetary Board can now focus on inflation-targetting rather than foreign exchange rate management now that the peso is again gaining strength. Medalla said the peso’s weakness last year was caused by the interest rate differential between the Philippines and the United States, which caused fund flows out of the Philippines as well as other emerging markets back into the United States and US dollar-denominated treasuries. To offset those effects, and to curb surging inflation, the BSP hiked interest rates by a total of 350 bps in 2022. Medalla however suggested that with the Peso’s resurgence, they have more space to focus on inflation, rather than foreign exchange volatility.“We may not be as concerned about the interest rate differential,” said Medalla. The BSP’s base case for US Federal Reserve rate adjustments this year is two hikes of 50 bps. He said they are looking at a 25 to 50 bps adjustment for the first rate setting meeting of the BSP this year, which will happen on February 16. However, Medalla said forex movements will still be a consideration when they meet. “It depends on what is happening on the forex markets. That is why I cannot completely rule it out.“Foreign exchange volatility could be painful for the Philippine government, which just borrowed a total of $3 billion in US dollar-denominated bonds with tenors of 5.5, 10.5 and 25 years. Medalla however said it is more critical to maintain investor confidence in the BSP’s inflation targeting.Meanwhile the Philippine Stock Exchange closed 0.49 percent lower on Tuesday at 6,756.59. Among the most actively traded stocks, BDO was one of the biggest losers, slipping 1.3 percent. Its sister firm SM Investments Corp meanwhile was up 0.39 percent. <div>ASIAN MARKETS</div>Asian markets were mixed Tuesday as growing optimism over China&#x27;s economic reopening was offset by warnings that US interest rates will continue to rise and stay elevated for some time.After a torrid 2022, equities have enjoyed a broadly strong start to the new year thanks largely to Beijing&#x27;s decision to throw off the shackles of its strict zero-Covid policy, which battered the economy.And while there are concerns about the short-term impact of soaring infections across the country, investors are growing increasingly confident thanks to government pledges of support, including for the troubled property sector.Signs that officials are taking a lighter approach to tech firms after a long-running crackdown have also provided support.However, sentiment is still closely linked to the outlook for US monetary policy as the Federal Reserve battles to bring inflation down from four-decade highs.A recent run of soft data suggesting the world&#x27;s top economy is slowing has provided hope the bank will be able to decelerate the pace of rate hikes and avert a recession.Still, policymakers remain determined to keep lifting borrowing costs until they achieve their goal of two percent inflation, from the current 7.1 percent.In the latest salvo, San Francisco Fed boss Mary Daly said rates would likely go above five percent before the policy board decides to stop lifting, while Atlanta Fed president Raphael Bostic tipped a similar level but added that they would not be changed for &quot;a long time&quot;.The comments dealt a blow to investors hoping for a change of tack later in the year.&quot;We are just going to have to hold our resolve,&quot; Bostic told the Atlanta Rotary Club. &quot;I am not a pivot guy. I think we should pause and hold there, and let the policy work.&quot;All eyes are now on the release of consumer price index figures Thursday, which could play a key role in the Fed&#x27;s next policy meeting at the end of the month.Asian markets tracked a mixed performance on Wall Street.Hong Kong, Sydney, Shanghai, Singapore, Manila, Mumbai, Bangkok and Jakarta all slipped while Tokyo, Seoul, Wellington and Taipei were in the green.&quot;After the sharp rally, Asian markets could see a bout of profit-taking amid headwinds from tighter financial conditions and no respite in Fed rate hike outlook,&quot; Nitin Chanduka at Bloomberg Intelligence said.&quot;Expectations for China are improving, but economic data may not lend validation until the country’s rampant Covid outbreak runs its course.&quot;<div>Key figures around 0710 GMT</div>Tokyo - Nikkei 225: UP 0.8 percent at 26,175.56 (close) Hong Kong - Hang Seng Index: DOWN 0.4 percent at 21,310.90 Shanghai - Composite: DOWN 0.2 percent at 3,169.51 (close) Dollar/yen: UP at 131.87 yen from 131.80 yen on Monday Euro/dollar: DOWN at $1.0731 from $1.0735 Pound/dollar: DOWN at $1.2167 from $1.2180 Euro/pound: UP at 88.19 pence from 88.11 pence West Texas Intermediate: DOWN 0.2 percent at $74.48 a barrel Brent North Sea crude: DOWN 0.3 percent at $79.43 a barrel New York - Dow: DOWN 0.3 percent at 33,517.65 (close) London - FTSE 100: UP 0.3 percent at 7,724.94 (close)<div>With a report from Warren de Guzman, ABS-CBN News and Agence-France Presse</div><div>RELATED VIDEO</div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=2314314" width="100%"></iframe></figure><div class="iwantbar">Watch more News on <a href="https://www.iwanttfc.com/#!/browse/Genres/News/tag_id_genres/id_news" target="_blank">iWantTFC</a></div><div> </div>

Data from the Bankers Association of the Philippines showed the peso closing at P54.87 to the US dollar on Tuesday after closing at P55.11 on Monday. 