Peso climbs on Powell comments

THE PESO recovered against the dollar on Thursday after US Federal Reserve Chair Jerome H. Powell affirmed that the US central bank will cut rates this year.

The local unit closed at P56.355 per dollar on Thursday, strengthening by nine centavos from its P56.445 finish on Wednesday, Bankers Association of the Philippines data showed.

The peso opened Thursday’s session at P56.35 against the dollar, which was also its intraday best. Its weakest showing was at P56.50 versus the greenback.

Dollars exchanged rose to $1.26 billion on Thursday from $1.19 billion on Wednesday.

The peso gained on Thursday as the dollar generally weakened after Mr. Powell said the Fed would still likely begin its easing cycle this year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Federal Reserve officials including Mr. Powell on Wednesday continued focusing on the need for more debate and data before interest rates are cut, a move financial markets expect to occur in June, Reuters reported.

“Recent readings on both job gains and inflation have come in higher than expected,” Mr. Powell said in a speech to the Stanford Graduate School of Business. While policy makers generally agree that rates can fall later this year, he said this will happen only when they “have greater confidence that inflation is moving sustainably down” to the Fed’s 2% target.

“The peso appreciated following the softer-than-expected US services report for March 2024,” a trader added in an e-mail.

For Friday, the trader sees the peso moving between P56.20 and P56.45 per dollar, while Mr. Ricafort expects it to range from P56.25 to P56.45. — A.M.C. Sy with Reuters