Peso recovers from near-record low on softer US inflation

The Philippine peso rebounded against the greenback on Wednesday after approaching its historic weakest level on the previous trading day, amid a cooler US inflation which reduced the allure of the dollar.

The local currency gained 2.4 centavos to close at P61.686:$1 from its near record-low of P61.71:$1 on Tuesday.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the US dollar “corrected” versus major global after the better-than expected US inflation data “that reduced the odds of a possible +0.25 Fed rate hike to December 2026.”

The US Bureau of Labor Statistics reported that consumer price index decreased 0.4% in June from 0.5% in May.

“Other offsetting positive factors for the peso exchange rate versus the US dollar: Earlier, the BSP cautioned banks against using foreign exchange derivatives transactions to profit from currency volatility, banks should limit non-deliverable foreign exchange contracts to legitimate economic purposes, such as hedging of their own investments; transactions not supported by specific, identifiable underlying exposures and documentation, particularly those for speculative positioning, directional peso exposure, or arbitrage-driven activities are not allowed,” Ricafort said. — BM, GMA News