Peso sustains recovery

The peso slightly strengthened against the dollar amid waning speculations that the US Federal Reserve will reduce monetary stimulus following disappointing manufacturing data in the world's largest economy.

A dollar fetched P42.02 when trading ended, a little less than the P42.055 from Monday's close.

Some $1.075 billion changed hands, below the $1.468 billion previously.

“Weak US manufacturing casts doubts over [whether] the US Federal Reserve will taper off stimulus. This has caused the peso's strengthening today,” a trader said.

According to Reuters, the Institute for Supply Management reported that its gauge for new orders slipped last month and said there has been less demand for exports.  

Recent manufacturing data raised doubts about the Fed scaling back its $80-billion monthly stimulus measures, which many in the foreign exchange market were betting on, the wire agency added.

Speculations of tapering off the stimulus – dubbed quantitative easing (QE) – saw the peso revisiting fresh lows in recent trading days.

Another trader at a local bank said, “Gains made by the peso were on corrections in the dollar following sharp movements in the foreign exchange over QE speculations.”

The second trader noted “volatility may increase in the local foreign exchange market.”

Investors, however, maybe turning into “other assets, like T-bills and time deposits,” the first trader said, noting that the stubborn Philippine Stock Exchange continues its losing streak amid valuation concerns and still on speculations over QE.

Traders see the peso moving 41.85 to 42.10 per dollar on Wednesday. — with Reuters/ BM, GMA News