THE local currency on Tuesday appreciated to near the P52 territory anew ahead of the Bangko Sentral ng Pilipinas’s (BSP) Monetary Board meeting this week.
Data from the Bankers Association of the Philippines (BAP) showed the peso gaining value against the US dollar during the day, to end the day’s trade at 53.1 to a dollar, from the 53.295 to a dollar in the previous day.
The total traded volume was also larger on Tuesday at $738.7 million, from the $666.1 million in the previous day’s trade.
The peso has been steadily recovering since trading in the high 54 territory in September to mid-October this year, when it hit fresh 12-year lows.
This is despite uncertainty surrounding the BSP upcoming move on Thursday; markets are guessing on whether the Monetary Board will pull another rate hike or pause its cycle to support growth.
Economists, in earlier forecasts, had expressed mixed views on the upcoming meeting.
In particular, in its latest commentary on the Philippine economic dynamics, Fitch Solutions —the research arm of Fitch Group —believes the BSP will continue to hike rates at the next meeting despite the risks of rising interest rates dampening consumer spending.
This move, Fitch Solutions said, will also be crucial to keeping the peso strong, particularly at a time when risk aversion is rising globally.
On the other hand, ING Bank shared contrasting views for the BSP’s next move, saying it will likely halt any movement off the table to prop up its growth numbers.
“Until the Philippines GDP [gross domestic product] release, our house view had been for a 25 basis- point BSP rate hike at the meeting next week. That’s now been revised to no change, probably through the rest of the year,” ING Bank economist Prakash Sakpal said in the ING’s most recent review of central banks in the region.