Peso returns to P53:$1 level

The Philippine peso continued its uptrend on Thursday as it returned to the P53 to one dollar level as the US Federal Reserve’s move to slow down rate hikes this year reduced the allure of the greenback.

After finishing at P54.475:$1 on Wednesday, the local currency gained 63 centavos to close at P53.845:$1.

This is the strongest for the peso in over seven months, or since June 17, 2022, when it closed at P53.75: $1.

It is also a significant improvement from the record-low closing rate of P59:$1 that was observed in early and mid-October 2022.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the peso’s strength was "due to the weakness of the US dollar against major global currencies to new nine-month lows; after the widely expected but smaller Fed rate hike of +0.25 basis points."

The US Federal Reserve delivered a widely anticipated 25 basis point rate hike as it is expected to slow the pace of its policy tightening amid easing inflation.

Ricafort said the relatively stronger peso exchange rate against the US dollar "would help ease inflationary pressures through lower importation costs/prices and also partly support the recent gains in the local financial markets, especially the stock markets and the bond markets."

Since the start of 2023, the peso has appreciated by P1.91 or 3.4%, from P55.755 to $1 as of the end of 2022. —VBL, GMA Integrated News