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The PESO appreciated against the dollar on Tuesday after a Federal Reserve official said they may consider slower rate hikes at their next monetary policy meetings.
The local unit closed Tuesday at 57.21 pesos per dollar, up seven centavos from Monday’s 57.28 pesos, the Bankers Association of the Philippines reported.
The peso opened Tuesday’s trading session at P57.30 against the dollar. Its worst finish of the day was P57.47, while its intraday best was P57.20 against the greenback.
Dollars traded on Tuesday rose to $766.9 million from $720.63 million on Monday.
“The peso rose after Fed official Brainard commented that the US Federal Reserve may need to put the brakes on future US interest rate hikes,” a trader said in an email.
Fed Vice Chair Lael Brainard said the Federal Reserve needed to raise rates further but could consider smaller hikes.
The Fed has hiked interest rates by 375 basis points (bps) since March so far.
The peso appreciated after remittances from foreign Filipino workers (OFWs) surged in September, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.
“(This) could help support the peso exchange rate with more structural flows into the US dollar and also help support consumer spending, which accounts for at least 73% of the economy and is also a bright spot for the economy,” said Mr. Ricafort.
Cash remittances home from Filipino migrants continued to increase in September as OFWs are likely to continue to benefit from a weaker peso amid high inflation.
Data released by the central bank on Tuesday showed cash remittances routed through banks rose 3.8% to $2.84 billion in September, compared with $2.74 billion a year earlier.
The amount of cash sent home by Filipino migrants was the highest in two months, or since July’s $2.92 billion. However, growth pressure slowed from 4.3% in August.
“Market sentiment also bolstered following talks between US President Joe Biden and Chinese President Xi Jinping to ease tensions and stabilize ties between the two countries/world’s largest economies,” Mr. Ricafort added.
The two officials met in Bali, Indonesia, during the annual summit of the Group of 20 leaders from the world’s major developed and emerging economies.
For Wednesday, both the trader and Mr. Ricafort gave a forecast range of P57.10 to P57.30 per dollar. — Keisha B. Ta-asan