THE PESO ended flat against the dollar on Wednesday, with the market waiting for the release of January US consumer inflation data overnight and the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on Thursday.
The local unit closed unchanged at P58.19 per dollar on Wednesday, Bankers Association of the Philippines data showed.
The peso opened Wednesday’s session slightly weaker at P58.20 against the dollar. Its intraday best was at P58.14, while its worst showing was at P58.24 versus the greenback.
Dollars traded went up to $1.24 billion on Wednesday from $1.194 billion on Tuesday.
The peso mostly traded sideways against the dollar before the US consumer price index (CPI) data release overnight and the BSP’s policy decision on Thursday, a trader said in a phone interview.
The peso was flat as the dollar was likewise steady before the January US CPI data, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
A BusinessWorld poll showed that 19 out of 20 analysts expect the BSP to cut benchmark borrowing costs by 25 basis points (bps) for a fourth straight meeting to bring the policy rate to 5.5%.
BSP Governor Eli M. Remolona, Jr. earlier said that a rate cut is “on the table” at this week’s review.
He said they may slash benchmark rates by a total of 50 bps this year as “policy insurance” against risks, with the cuts likely to be done in 25-bp increments each in the first and second half.
For Thursday, the trader expects the peso to move between P58 and P58.40 per dollar, while Mr. Ricafort sees it ranging from P58.10 to P58.30
The dollar held mostly steady against other major currencies on Wednesday as traders awaited US inflation data, though remarks from Federal Reserve Chair Jerome H. Powell a day earlier lifted US yields and lent some support against the yen.
The dollar rose 0.7% to 153.53 yen, breaking above its 200-day moving average, but elsewhere it was steady, trading at $1.0358 per euro.
Mr. Powell, in testimony on Capitol Hill on Tuesday, stuck to a view there was no hurry to lower interest rates, which pushed 10-year Treasury yields up about 4 basis points.
US CPI was set to be published at 1330 GMT and economists polled by Reuters expect core consumer inflation to increase slightly to 0.3% for January.
Money market traders have scaled back bets on Fed rate cuts this year and are now only fully pricing in one quarter-point cut, with around a 40% chance of a second.
Speculators in the currency market are long dollars and some may be nervous that a softer reading could stoke expectations for rate cuts and force an unwind of wagers on a higher dollar. — A.M.C. Sy with Reuters
