Peso up slightly before interest rate decision

THE PESO went up slightly against the dollar on Wednesday ahead of the US Federal Reserve’s policy decision.

The local currency closed at P55.335 versus the dollar on Wednesday, strengthening slightly by half a centavo from Tuesday’s P55.34 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Wednesday’s session steady at P55.34 per dollar. It climbed to as high as P55.25, while its worst showing was at P55.41 versus the greenback.

Dollars traded inched down to $1.054 billion on Wednesday from $1.057 billion on Tuesday.

“The peso moved sideways ahead of the Fed meeting tonight. All eyes on [Fed Chair Jerome H.] Powell and company,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message on Wednesday.

The Fed was set to announce its policy decision overnight.

Markets were expecting the US central bank to raise rates by 25 basis points (bps) and to signal a pause moving forward.

Since March 2022, the Fed has hiked borrowing costs by a total of 475 bps, bringing its key rate to a range between 4.75% and 5%.

The peso was also supported by the dollar’s decline, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar fell on Wednesday, ahead of an expected rise in US interest rates, and as gloomy jobs data, a standoff over the US debt ceiling and nervousness following banking collapses clouded the investment outlook, Reuters reported.

The dollar index, which measures the US currency against six others, fell by 0.25% to 101.61, dropping for a second day in a row.

For Thursday, Mr. Ricafort sees the peso moving between P55.25 and P55.45 against the dollar. — AMCS with Reuters