Peso climbs vs dollar ahead of Powell remarks

THE PESO strengthened against the greenback on Tuesday as the dollar sank to a one-month low and amid expectations of supportive monetary policy from the US Federal Reserve.

The local unit closed at P48.64 versus the dollar on Tuesday, gaining six centavos from its Monday’s finish of P48.70, data from the Bankers Association of the Philippines showed.

The peso opened the session at P48.72 a dollar. Its weakest showing was at P48.76 while its intraday best was its close of P48.64 against the greenback.

Dollars traded at $1.221 billion on Tuesday from $1.288 billion on Monday.

The peso gained due to the dollar’s weakness against major global currencies, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Meanwhile, a trader said currency trading was also affected by investors awaiting signals about the Fed’s monetary policy direction.

The dollar touched its lowest since Jan. 13 on Tuesday as investors shifted focus to how Fed chief Jerome Powell might respond to expectations of resurgent inflation, while commodity-linked currencies hovered near multi-year highs, Reuters reported.

The rise in inflation expectations as investors bet on a post-pandemic economic rebound and the so-called “reflation” trade had lifted US government bond yields and — briefly — the dollar until earlier this month.

But analysts expect Mr. Powell, who was set to testify before Congress at 1500 GMT, will provide reassurance that the Fed will tolerate higher inflation without rushing to raise rates. That might calm bond markets and eventually weigh on the dollar, they said.

“Mr. Powell will very likely reiterate that the Fed is a long way from meeting its goals and that it will likely take some time before ‘sufficient progress’ has been made to taper its bond purchase program,” UniCredit analysts said.

Joe Capurso, Commonwealth Bank of Australia currency analyst in Sydney, said he thought Mr. Powell would deliver “a bit of a cold shower and say: ‘Mr Market you’re getting a bit ahead of yourself….the US economy is long, long way from full employment.’”

The dollar index was last at 90.046, flat on the day, having earlier fallen to 89.941, its weakest since Jan. 13.

Positioning data shows investors overwhelmingly betting that a US dollar, which has been dropping since last March, will keep falling as the world recovers from the COVID-19 pandemic.

For today, Mr. Ricafort gave a forecast range of P48.55 to P48.75 per dollar, while the trader expects the exchange rate to move within the P48.55 to P48.75 band. — LWTN with Reuters

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

Your daily news source covering investing ideas, market stocks, business, retirement tips from Wall St. to Silicon Valley.

Disclaimer:, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 TheProficientInvestor. All Rights Reserved.

To Top

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!