Peso gains strength as mixed data spoils Fed hike hopes

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The peso closed at its strongest level in a month against the US dollar as mixed data dampened expectations for a Fed rate hike ahead of the outcome of its meeting.

The Philippine currency gained 21 centavos to finish at P46.44 to $1 from P46.65 on Wednesday. Thursday’s close marks the peso’s firmest level since it settled at P46.35 on August 19 this year.

The peso tracked the regional currencies’ advance as equities and oil prices also rose after a mixed slew of data from the US doused hopes for an increase in the Fed’s key rates tonight.

“Risk-off sentiment pervaded across markets on Thursday—very uncharacteristic ahead of the all-important FOMC [Federal Open Market Committee] meeting conclusion,” Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), said.


Mapa noted that stocks also traded higher on Wall Street, led by energy counters.

“Foreign buying in the respective equity markets, including the PSEi [Philippine Stock Exchange index] helped local currencies like the peso to strengthen,” he said.

Dealers also viewed the chance for a Fed hike as low given Fed futures trading was pegging odds of an increase at only 28 percent, Mapa said.

A slower 0.2 percent August inflation figure from the US over Fed rate hike.

“All these factors forced the US dollar weaker against its Asian peers, with the peso tracking regional movements,” Mapa added.

The peso opened at P46.58 to $1 on the Philippine Dealing System (PDS) on Thursday, before trading between P46.43 and P46.58.

Total volume transacted on the PDS rose to $491.4 million from $417 million in previous trade.

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