Peso rises to fresh 4-year high on BSP surprise rate cut

The Philippine peso rebounded against the US dollar, hitting a fresh four-year high, on Friday as the Bangko Sentral ng Pilipinas’ (BSP) surprise interest rate cut provided further support for the local unit.

The local currency gained 8.5 centavos to close at P48.23:$1 from Thursday’s finish at P48.315.

This is the strongest for the peso in more than four years since October 24, 2016 when it finished at 48.19.

Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the local currency’s rally “after the surprise BSP rate cut that further lowers borrowing costs and the resulting latest gains in the local stock market to the highest in nearly nine months.”

The BSP on Thursday announced key policy rates will be cut effective Friday, November 20, 2020 — the overnight reverse repurchase (RRP) facility at 2%, the overnight deposit at 1.5%, and the overnight lending facility at 2.5%.

The local stock barometer, PSEi, also saw a rally as closed at 7,169.79, up 2.46% from the previous session’s close as investors welcomed the surprise interest rate cut by the Bangko Sentral ng Pilipinas which boosted optimism on the country’s economic recovery from the COVID-19 crisis.

“The unexpected/surprise BSP rate cut of -0.25 to a new record low of 2.00% that helps boost economic recovery prospects in terms of further reducing borrowing costs, spur greater demand for loans that boost investments, jobs/employment, greater business/economic opportunities, and more gains in the local financial markets,” Ricafort said.

Since the start of 2020, the peso has already appreciated by a total of P2.405 or 4.7%.—AOL, GMA News