Peso barely changed as Fed chair turns ‘dovish’

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THE PESO closed nearly flat versus the greenback on Thursday amid muted trading among market players after US Federal Reserve Chair Janet L. Yellen’s dovish remarks on Wednesday.

The local currency closed at P50.53 against the dollar yesterday, gaining by two centavos from its P50.55-per-dollar finish on Wednesday.

The peso opened Thursday’s session at P50.45 per dollar. Its intraday peak was at P50.40 versus the foreign currency, while its worst showing was at P50.56-to-the-dollar.

Traders attributed the local currency’s muted performance to a quiet market that was just consolidating.

“Basically we saw range trading because of a quiet market and it was seen in low volumes from yesterday’s trading,” one trader said by phone on Thursday.

Similarly, another trader said in a phone interview: “Basically the peso was just consolidating within the P50.40 to P50.60 levels and there was not much liquidity in the market.”

Dollars traded amounted to $372.5 million, down from the $595.7 million logged the previous session.

The trader said market players were quiet after the Ms. Yellen’s dovish comments on Wednesday and after the peso just tracked the direction of the dollar against a basket of currencies.

“There was not much market activities because some market were still digesting dovish statements of Yellen [on Wednesday] and amid broad dollar weakness across the board,” the trader said.

Reuters reported Ms. Yellen said the US economy is in good condition for the US central bank to hike interest rates gradually and not too fast to reach the neutral level and is on track with its plan of trimming its over $4 trillion bond portfolio.

However, the Fed Chair noted slower inflation and a neutral interest rate could leave the regulator with less room to act.

Meanwhile, the trader noted that the Bangko Sentral ng Pilipinas (BSP) was present in the market yesterday.

As regulator of the Philippine financial system, the BSP sometimes steps in currency trading to temper any sharp swings in the peso.

“Near the session’s close, we suspected intervention from the BSP,” the trader said.

For today, both traders see the peso moving within P50.40-P50.60 versus the dollar.

“The peso could still trade within that range unless there’s a surprise from Yellen, since it’s her second day of testimony in front of the US Congress. So whatever she postulates, dictates the direction of the dollar-peso,” one trader noted. — Janine Marie D. Soliman

The peso eked out a small gain after Federal Reserve chair Janet L. Yellen’s “dovish” US Congress testimony. — AFP

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