The Philippine Peso rallied back against the US dollar on Tuesday as traders position ahead of the Bangko Sentral ng Pilipinas (BSP) rate-setting meeting on Thursday to address the issue on the growing external uncertainties.
It closed at P53.1 versus the greenback yesterday gaining 19 and a half centavos from the P53.295-per-dollar close on Monday.
Then the peso opened slightly stronger at P53.28 before peaking at P53.08. But on the other hand it also hit at P53.30 versus the dollar.
Interestingly, the dollars traded grew to $738.7 million from $666.1 million on Monday. But this should not signal us to rejoice on the stronger pesos because a trader said there’s still uncertainties on whether the local central bank will continue to hike or hold interest rates. Everything will be known by Thursday.
According to a trader, “The decision of BSP rate on Thursday whether there will be hike or not. If they hike rates, the dollar-peso may go down further so they’re still seeing the peso positive. But they are lightening their position as the BSP may still hike.”
The uncertainties that on what would be the impact of Brexit (the exit of the UK) from the European Union on the global market remain uncertain too as everybody is on a wait-and-see status.
Another issue at hand is the effect between the US-China trade conflict which would inevitably affect the dollar. While at this point in time the peso has slightly rallied versus US dollar, due to the risk-on sentiment in view of the resumption of US-China trade war. It is not far to happen that the peso would likely weaken due to strong US inflation data.