THE PESO strengthened against the dollar on Thursday after the Bangko Sentral ng Pilipinas (BSP) raised borrowing costs anew at its policy meeting in its fight against inflation.
The local currency ended at P55.685 against the greenback, up by six centavos from Wednesday’s P55.745 close, data from the Bankers Association of the Philippines’ website showed.
The peso opened Thursday’s session at P55.73 per dollar. Its weakest showing for the day was at P55.84, while its intraday best was at P55.61 versus the greenback.
Dollars traded jumped to $1.055 billion on Thursday from $731.72 million on Wednesday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso strengthened after the BSP hiked benchmark interest rates by 50 basis points (bps), as expected by the market.
“This will help maintain comfortable interest differentials from the Fed (US Federal Reserve) that could help support the peso and, in turn, also help stabilize overall inflation,” Mr. Ricafort said.
Meanwhile, the trader noted in a Viber message that the peso initially weakened due to corporate demand for dollars but pared its losses following the policy decisions of the Fed and the BSP.
The BSP raised benchmark interest rates by 50 bps at its meeting on Thursday, bringing its policy rate to 5.5%. Rates on the central bank’s overnight deposit and lending facilities were likewise raised to 5% and 6%, respectively.
The Philippine central bank has raised rates by 350 bps since May.
Meanwhile, the Fed hiked its benchmark overnight interest rate by 50 bps to the 4.25%-4.5% range and projected it could go up to 5%-5.25% next year.
The Fed has now raised borrowing costs by 425 bps since March.
For Friday, Mr. Ricafort expects the peso to range from P55.55 to P55.75 per dollar, while the trader gave a forecast of P55.50 to P55.75. — AMCS