THE PESO strengthened against the dollar on Thursday on news of potential Ukraine-Russia peace talks and as the Bangko Sentral ng Pilipinas (BSP) paused its rate-cut cycle.
The local unit closed at P58.06 versus the greenback on Thursday, climbing by 13 centavos from its P58.19 finish on Wednesday, Bankers Association of the Philippines data showed.
The peso opened Thursday’s session weaker at P58.25 against the dollar. It traded within a wide range as intraday best was at P58.02, while its worst showing was at P58.34 versus the greenback.
Dollars exchanged rose to $1.64 billion on Thursday from $1.24 billion on Wednesday.
“The dollar-peso initially traded higher on growing bets that the Federal Reserve will lessen cutting interest rates on the wheels of the higher CPI (consumer price index) print, but was lower in the afternoon after news of Trump and Putin agreeing to negotiate ending the war in Ukraine,” a trader said in a phone interview.
The dollar weakened due to lower global crude oil prices on news of potential Ukraine peace talks, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.
US President Donald J. Trump said both Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky expressed a desire for peace in separate phone calls with him on Wednesday, and Mr. Trump ordered top US officials to begin talks on ending the war in Ukraine, Reuters reported.
The conversations came after Mr. Trump’s Defense secretary earlier said Kyiv would have to give up its long-held goals of joining the NATO military alliance and regaining all of its territory seized by Russia, signaling a dramatic shift in Washington’s approach to the conflict.
In the foreign exchange market, the dollar lost 0.2% to 154.15 yen, having jumped 1.3% overnight following the US CPI data.
US consumer prices rose by the most in nearly 1-1/2 years in January. The closely watched core inflation index, which excludes food and energy prices, rose 0.4% in the month, above forecasts for 0.3%.
With the Federal Reserve already signaling no rush to cut rates further, investors scaled back expectations of more policy easing this year to just 28 basis points (bps), equivalent to just one cut.
“In addition to that, the BSP shocked the market as they expected a cut but they opted to hold key rates in their meeting, which is why the peso reached its high of P58.02,” the trader said.
The Monetary Board on Thursday kept its target reverse repurchase rate unchanged at 5.75%, contrary to market expectations of a 25-bp cut.
The pause came following three consecutive 25-bp reductions since the BSP began its easing cycle in August 2024.
“The Monetary Board noted that domestic growth prospects continue to be firm. However, uncertainty over global economic policies and their impact on the domestic economy has increased significantly,” BSP Governor Eli M. Remolona, Jr. said.
For Friday, the trader expects the peso to move between P57.90 and P58.30 per dollar, while Mr. Ricafort sees it ranging from P57.95 to P58.15. — A.M.C. Sy with Reuters
