The peso closed at its strongest level in more than three weeks on Thursday after minutes of the recent Federal Open Market Committee (FOMC) showed US policy makers viewed an interest rate increase in June unlikely.
The Philippine currency strengthened to P44.49 to $1, gaining 11 centavos from its P44.60 close on Wednesday.
Thursday’s close was the strongest finish for the peso since it settled at P44.32 on April 29 this year.
“The minutes of the most recent FOMC meeting indicated that the Fed was not likely to hike interest rates at its June meeting. This caused the dollar to tumble as the interest rate hike would be delayed till after June,” Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), said.
The minutes of the Fed April meeting, however, also hinted that a hike later in the year is still possible, mentioning that the policy makers anticipate growth to pick up after a disappointing first quarter.
The minutes showed that the Fed considered the drop in oil prices, a stronger dollar, and the harsh winter weather as some of the economic deterrents.
Overall, the Fed still expects the resumption of moderate growth as they continue to depend on data to guide their next action.
The local currency opened at P44.55 to $1 on the Philippine Dealing System (PDS) on Thursday before trading between P44.46 and P44.55.
Total volume transacted on the PDS fell to $507.3 million from $543.6 million in previous trading.