Peso down on BSP easing bets

peso dollar bills 040318 - Peso down on BSP easing bets

THE PESO edged lower on Wednesday as the Bangko Sentral ng Pilipinas (BSP) chief hinted on another rate cut this year.

The local unit ended at P52.321 against the greenback on Wednesday, shedding 6.1 centavos from its P52.26-to-a-dollar close on Tuesday.

The peso opened at P52.28 versus the dollar. It traded in a tight range, with its weakest point recorded at P52.33, while its intraday best was at P52.22 against the greenback.

Dollars traded on Wednesday thinned to $1.107 billion against the $1.221 billion seen on Tuesday.

“The peso weakened following dovish comment from BSP Governor [Benjamin E.] Diokno of a possible policy rate cut and lingering market caution amid tensions between the US and China,” a currency trader said in an e-mail.

Another trader said the local currency is “consolidating” as the market awaits fresh leads this week.

“But the trend this week is a weaker peso amid risk-off sentiment as market watchers awaits resolution of escalating US-China trade war,” the second trader said in a phone interview.

Last Tuesday, BSP chief Mr. Diokno said the market can expect another 25-basis-point cut before the year ends. He also signalled another reduction in banks’ required deposit reserves before the Sept. 26 policy meeting.

For today, traders said the peso may decline on strong US data.

“The local currency might weaken further on bets that the second revision of the US GDP (gross domestic product) growth report [today] is expected to remain firm from the initial estimate,” the first trader said.

The first trader expects the peso to move at a range of P52.20 to P52.40 against the dollar today, while the second trader sees it playing within the P52.10-to-P52.50 band. — Mark T. Amoguis

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