The peso strengthened to a two-month high against the US dollar on Monday as markets anticipated a strong policy rate action from the Bangko Sentral ng Pilipinas during the Monetary Board meeting on Thursday.
The peso gained P0.30 to close at 52.85 from 53.13 Friday. It was the peso’s strongest level in almost two months since 52.70 on June 8, 2018. Volume traded stood at $892.9 million, up from $595 million previously.
ING Bank Manila senior economist Joey Cuyegkeng said in a report the local currency was one of Asian emerging market currencies that posted week-on-week strength.
“PHP posted a 0.4 percent WoW strengthening on the back of market expectations of an aggressive or strong BSP policy rate action at this Thursday’s policy rate meeting,” Cuyegkeng said.
“… Sustained upward trend of inflation would likely raise the possibility of a 50 bps hike at the Thursday meeting,” Cuyegkeng said.
Inflation in June further accelerated to a five-year high of 5.2 percent from 4.6 percent a month ago, bringing the first-half average to 4.3 percent, or over the upper limit of the target range of 2 to 4 percent for the year.