THE PESO appreciated to a near five-month high against the dollar on Tuesday after US Federal Reserve Chair Jerome H. Powell signaled a September rate cut.
The local unit closed at P56.281 per dollar on Tuesday, strengthening by 5.2 centavos from its P56.333 finish on Thursday, Bankers Association of the Philippines data showed.
This was the peso’s strongest finish in almost five months or since its P56.255 per dollar close on April 1.
The peso opened Tuesday’s session stronger at P56.222 against the dollar. Its weakest showing was at P56.31, while its intraday best was at P56.17 versus the greenback.
Dollars exchanged inched down to $1.587 billion on Tuesday from $1.59 billion on Thursday.
The peso was supported by a generally weaker dollar on Tuesday amid dovish signals from Mr. Powell over the weekend, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso strengthened after Fed Chair Powell hinted of a potential US policy rate cut next month in the Jackson Hole Symposium last week,” a trader likewise said in an e-mail.
For Wednesday, the trader sees the peso moving between P56.20 and P56.45 per dollar, while Mr. Ricafort expects it to range from P56.20 to P56.40.
The dollar and yen eased on Tuesday, paring some of their safe-haven gains from the start of the week in the wake of a major missile exchange between Israel and Hezbollah that stoked fears of a wider escalation, Reuters reported.
Imminent US rate cuts also remained at the top of investors’ minds and further pressured the greenback, though currencies were mostly rangebound on the lack of major news in the Asian session.
Most currencies were holding near milestone highs and the dollar near its lowest level in more than a year, helped by the likelihood of a US rate cut in September after Mr. Powell more or less nodded to such a move in his Jackson Hole speech on Friday.
San Francisco Fed President Mary Daly also said on Monday a quarter-percentage point reduction in borrowing costs next month was likely.
Against a basket of currencies, the greenback dipped 0.03% to 100.82, languishing near a 13-month low of 100.53 hit in the previous session. — A.M.C. Sy with Reuters
