The Philippine peso experienced significant gains against the US dollar on Wednesday, reaching its highest point in one month. The currency reached a close of PHP61.41, a 0.4% increase compared to Tuesday's closing rate of PHP61.81. The strong performance can be attributed to the Philippine stock market's performance and positive signals from the Bangko Sentral ng Pilipinas (BSP) Governor Elias M. Remolona. The BSP has indicated that a potential rate hike might occur, with a 50-basis point (bp) move, aiming to address inflation risks. However, the likelihood of this happening is small, as the Monetary Board increased borrowing costs by 25 bases points for the second meeting, moving the benchmark re-purchasing rate to 4.75%.
According to a trader, the peso could fluctuate between PHP61.20 and PHP61.60 against the dollar as traders await the US Federal Reserve's policy decision. Meanwhile, Chief Economist Michael Ricafort anticipates the peso to range from PHP61.25 to PHP61.55.
