MANILA – The Philippine peso firmed up at its strongest level in nearly 18 months on Monday as the stock market entered bull territory.
The local currency gained 13 centavos to close at P51.00:$1 from P51.13:$1 on Friday.
Monday’s peso-dollar rate is the strongest closing of the peso in nearly 18 months or since January 26, 2018 when it closed at P50.84:$1.
“The peso closed stronger today…after the strong gains in the local stock market, already at the bull market or at least 20 percent from the low of 6,790.58 posted on October 11, 2018,” said Michael Ricafort, economist at the Rizal Commercial Banking Corp.
The PSEi closed at 8,365.29 on Monday, up 223.47 points or 2.74 percent.
“US dollar weaker vs. major global currencies including the peso due to possible Fed rate cut as early as the next FOMC meeting later this month,” Ricafort noted.
Federal Reserve chairman Jerome Powell indicated last week that a rate cut is likely at the Fed’s next meeting as businesses slow investment due to trade disputes and a global growth slowdown.
The Federal Open Market Committee is scheduled to meet on July 30 and 31 to discuss whether or not a change in key policy rates is warranted.
“Possible easing of local monetary policy amid easing inflation and possible Fed rate cut have also supported recent gains in local financial markets, including the peso,” Ricafort said.
Bangko Sentral ng Pilipinas governor Benjamin Diokno hinted last week of the possibility of further lowering the reserve requirement ratio, but noted that a cut in interest rates will have to come first. (GMA News)
