On the foreign exchange spot market on Thursday, the peso ended the reading session at P58.635 against the dollar, which was weaker than the previous day’s close of P58.42.
But this was not before the peso dipped to as low as P58.73 in early afternoon trading – just 27 centavos off the P59 level – the currency’s historic low that was recorded in October 2022.
“It was partly due to dovish statements from economic managers,” one banker said. “So definitely the market will take its cue from them.”
Last Monday, Finance Secretary Ralph Recto told an economic briefing that he sees the central bank cutting interest rates by a total of 150 basis points over the next two years.
This dovish statement added to that made by BSP Governor Eli Remolona Jr. earlier this month predicting that a rate cut could come as early as August. He also added that a sharp reduction in banks’ reserve requirements was also on the cards.
Lower interest rates, while good for economic growth, usually results in a weaker currency as fund managers convert their assets to other currencies with better yields.
On the foreign exchange market on Thursday, trading was heavy with $1.387 billion changing hands.
Another reader said the market is still adjusting to the central bank’s laissez faire approach to managing the currency.
“They used to be manipulative,” he said of the central bank’s trading strategy. “Now, it seems the [foreign exchange] rate is more market driven.”
Senior Reporter
