THE PESO strengthened against the dollar on Tuesday on renewed concerns over the US Federal Reserve’s independence as the Trump administration continued to attack its chief Jerome H. Powell.
The local unit closed at P57.05 per dollar, jumping by 12.5 centavos from its P57.175 finish on Monday, Bankers Association of the Philippines data showed.
The peso opened Tuesday’s session stronger at P57.03 against the dollar. It climbed to as high as P56.965, while its intraday low was at P57.07 against the greenback.
Dollars exchanged went down to $1.29 billion on Tuesday from $1.36 billion on Monday.
“The peso gained as the dollar continued to suffer from increasing pressure from the Trump administration towards Fed Chair Powell after Treasury Secretary Bessent called for a closer scrutiny of the Eccles building renovations,” a trader said in an e-mail.
US Treasury Secretary Scott Bessent said the Federal Reserve’s vital independence on monetary policy is threatened by its “mandate creep” into non-policy areas and he called on the US central bank to conduct an exhaustive review of those operations, Reuters reported.
Mr. Bessent said a review should be conducted into the Fed’s decision to launch a massive renovation project of its headquarters at a time when it is posting operating losses. He did not say who should conduct that review, adding that he has “no knowledge or opinion on the legal basis” for the project.
US President Donald J. Trump has railed repeatedly against Mr. Powell and urged him to resign because of the central bank’s reluctance to cut interest rates. In recent days, Mr. Trump has also taken aim at the $2.5-billion renovation at the Fed’s almost 100-year-old Washington headquarters, which has exceeded its budget, suggesting there could be fraud involved and that might be a reason to oust Mr. Powell.
The Fed’s Board of Governors approved the renovation project in 2017, during Mr. Trump’s first term, and received design approval from the National Capital Planning Commission in 2020 and 2021.
Mr. Powell’s term as chair ends in May 2026, although he is due to stay on as a Fed governor through January 2028.
The peso was also supported by expectations of more Bangko Sentral ng Pilipinas (BSP) rate cuts this year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Finance Secretary Ralph G. Recto, who also sits on the BSP’s policy-setting Monetary Board, said the central bank has room to deliver two more 25-basis-point (bp) rate cuts this year amid subdued inflation.
BSP Governor Eli M. Remolona, Jr. has likewise signaled two more rate cuts in 2025.
The Monetary Board in June reduced borrowing costs by 25 bps for a second straight time this year, bringing its policy rate to 5.25%.
Since starting its easing cycle in August last year, the central bank lowered interest rates by a cumulative 125 bps.
For Wednesday, the trader said the peso could weaken anew on potentially hawkish remarks from the Mr. Powell overnight.
The trader expects the peso to move between P56.95 and P57.20 on Wednesday, while Mr. Ricafort sees it ranging from P56.90 to P57.10. — A.M.C. Sy with Reuters
