Peso rebounds to fresh near 4-year high on Fed approach to inflation

The Philippine peso closed stronger against the greenback on Friday as the latest US Federal Reserve policy to allow inflation to accelerate further weighed on the dollar.

The local currency gained 14.5 centavos to close at P48.485:$1 from Thursday’s finish at P48.63.

This is the highest for the peso since in nearly four years it closed at P48.48:$1 on November 4, 2016.

“The peso appreciated anew vs. the US dollar after the latest moves by the Federal Reserve to allow inflation and employment to go higher,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

Federal Reserve chairman Jerome Powell announced that the US central bank agreed to allow inflation to go above its 2% target. The Fed also outline a new approach on employment, which will focus on low and moderate income communities.

Ricafort said the latest US central bank policy has led to declines in US government bond prices, which “thereby partly leading to weaker US dollar vs. major global currencies as the sell-off in US government bonds/Treasuries further reduced the attractiveness or allure of the US currency, on top of the near record low US interest rates/bond yields.”

The peso has appreciated for the 11th straight week.

Since the start of 2020, the local unit has already appreciated against the US dollar by a total of P2.15 or 3.7% from P50.635:$1 in end-2019. -MDM, GMA News