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Peso Strengthens As Central Bank Signals Steady Policy Stance

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Key Points

  • The peso strengthened against the US dollar as the central bank chief signaled rates are likely to be maintained in the upcoming policy-setting meeting.
  • Monday’s closing is its strongest in more than three years, or since it closed at P48.95 per dollar on November 11, 2016.
  • Dollars traded dropped from the $647.4 million logged on Friday to $409.3 million on Monday.
  • Visit The Financial Today’s homepage for more stories.

On Monday, the peso strengthened against the US dollar as the central bank chief signaled rates are likely to be maintained in the upcoming policy-setting meeting.

Data from the Bankers Association of the Philippines showed the local unit closed at P49.01 per dollar, appreciating 3.10 centavos from its P49.041 finish on Friday. Monday’s closing is its strongest in more than three years, or since it closed at P48.95 per dollar on November 11, 2016.

The peso opened the session Monday at P49.05 per dollar. The weakest was at P49.06 while its strongest was at its close of P49.01 against the greenback.

Dollars traded dropped from the $647.4 million logged on Friday to $409.3 million on Monday.

The peso gained after Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said they do not need to increase rates at the moment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

This comes ahead of the August 20 policy-setting meeting of the Monetary Board.

“Signals of no local policy rate cuts supported the peso,” Ricafort said in a text message.

Diokno said in a television interview on Monday there is “no compelling reason” to slash rates further following the 175 basis points in cuts so far this year.

“I don’t see a strong reason why we should have another policy cut,” Diokno said.

Rates on the BSP’s overnight reverse repurchase, lending, and deposit facilities are at record lows of 2.25%, 2.75%, and 1.75%, respectively.

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