EconomyEditor's PickPeso rises on dovish Fed comments

November 15, 2022

THE PESO appreciated versus the dollar on Tuesday after an official from the US Federal Reserve said they may consider slower rate increases at their next policy meetings.

The local unit closed at P57.21 per dollar on Tuesday, seven centavos better than its P57.28 close on Monday, the Bankers Association of the Philippines reported.

The peso opened Tuesday’s trading session at P57.30 against the dollar. Its worst showing of the day was at P57.47, while its intraday best was at P57.20 versus the greenback.

Dollars traded went up to $766.9 million on Tuesday from $720.63 million on Monday.

“The peso appreciated after Fed official Brainard commented that the US central bank might need to slow down any future US policy rate hikes,” a trader said in an e-mail.

Fed Vice Chair Lael Brainard said the US central bank needs to hike rates further, but it could consider smaller increases moving forward.

The Fed has increased benchmark policy rates by 375 basis points (bps) so far since March.

The peso appreciated after remittances from overseas Filipino workers (OFWs) rose in September, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“(This) could help support the peso exchange rate with more US dollar structural inflows and also help support consumer spending, which accounts for at least 73% of the economy and also a bright spot for the economy,” Mr. Ricafort said.

Cash remittances sent home by migrant Filipinos continued to grow in September as OFWs likely continued to take advantage of a weaker peso amid high inflation.

Data released by the central bank on Tuesday showed cash remittances coursed through banks grew by 3.8% to $2.84 billion in September from $2.74 billion last year.

The amount of cash sent home by migrant Filipinos was the highest in two months or since the $2.92 billion in July. However, the growth print slowed from 4.3% in August.

“Market sentiment also supported after the talks between US President Joe Biden and Chinese President Xi Jinping to ease tensions and stabilize the ties between the two countries/biggest economies of the world,” Mr. Ricafort added.

The two officials met at Bali, Indonesia, during the annual Group of 20 summit of leaders of 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

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