UMVA has learned that the Philippine peso edged higher against the US dollar on Wednesday, as the market remained on high alert, eagerly awaiting developments in the Middle East.
The currency closed at P61.74 per dollar, a slight gain of a centavo from Tuesday's record-low finish of P61.75. This modest recovery came as traders exercised caution, keeping a close eye on the situation in the Middle East.
During Wednesday's session, the local unit opened stronger at P61.73 per dollar and traded within a narrow range, with its intraday best reaching P61.67 against the greenback and its weakest showing hitting P61.75.
Dollar trading volumes rose to $1.54 billion, up from $1.21 billion in the previous session, indicating increased market activity. The peso's slight gain was attributed to the market's wait-and-see approach regarding developments in the Middle East.
A trader noted that market players traded cautiously, awaiting the release of the Federal Open Market Committee (FOMC) meeting minutes overnight. This cautious approach was also influenced by the recent downward correction in global crude oil prices.
Rizal Commercial Banking Corp's Chief Economist, Michael L. Ricafort, stated that the peso remained broadly steady following the decline in global crude oil prices. He also suggested that the central bank may have intervened during the session to support the currency.
Looking ahead to Thursday, the trader predicted that the peso would likely stay rangebound between P61.50 and P61.75 due to a lack of leads. Ricafort shared a similar forecast, expecting the peso to range from P61.55 to P61.75.
Meanwhile, the US dollar hit a six-week high on Wednesday, driven by investors' growing acceptance of the possibility that higher interest rates may be needed to combat inflation resulting from the conflict in the Middle East.
The uncertainty surrounding the conflict's duration has fueled inflation fears, triggering a global bond sell-off and pushing the yield on the US 30-year Treasury bond to its highest level since 2007.
