The local unit ended Thursday at P46.07 against the greenback from its previous finish of P46.03 per dollar, which was the peso’s strongest point so far for 2016.
The peso opened trading at P45.9 versus the dollar which was also its strongest intraday level. Its weakest point was seen at P46.07 per dollar which was also its closing rate.
Dollars traded declined to $600 million yesterday from Wednesday’s $925.5 million, data from the Philippine Dealing System showed.
“The peso remained generally strong against the US dollar still because of Fed Chair Yellen’s dovish speech at the Economic Club of New York,” a trader interviewed said.
“The peso, however, lost some of its strength partly due to the renewed decline in oil prices. Some investors were also waiting on the sidelines ahead of the US non-farm payrolls (NFP) data,” the trader added.
Another trader shared the same view saying investors were “cautious on making large bets” ahead of the release of the key employment data towards the end of the week.
“Everyone is awaiting the latest NFP report for fresh clues on the US employment sector causing some risk aversion,” the trader added.
Economists estimate US non-farm payrolls increased by 210,000 in March.
US Federal Reserve Chairman Janet L. Yellen had emphasized a cautious approach to normalizing monetary policy in light of fears about the domestic and global economies in her latest speech.
The Fed official also warned that the path of rate increases could change depending on data and the global economic environment.
The Fed held its policy rate steady as it wrapped up its two-day meeting. US central bankers also now project only two rate increases in 2016, a downward revision from the four increases that Fed officials had projected at their December meeting.
For Friday, a trader said the peso may still remain relatively strong, although it may weaken slightly, as expectations of soft Chinese manufacturing data may reduce the demand for riskier currencies.
“Exchange rate movements might be minimal, as investors might avoid making large bets ahead US non-farm payrolls report,” the trader added.
Traders said the exchange rate may move within the P46.90 to 47.20 per dollar range today.
ASIAN FX GAINS
Meanwhile, most emerging Asian currencies rose on Thursday, adding to monthly and quarterly gains, as waning expectations of near-term U.S. interest rate hikes spurred investors to seek higher yields in the region.
The Chinese yuan climbed as the central bank set its daily guidance rate at its strongest this year. The renminbi was set to post its largest quarterly gain since July-September 2014.
Malaysia’s ringgit hit a more than seven-month high to enjoy the best month in nearly 18 years, with government bond prices.
The South Korean won rose to a near four-month peak and produced its largest monthly gain in seven years, thanks to capital inflows.
Taiwan’s dollar advanced to its strongest in more than seven months on demand from foreign financial institutions. The island’s currency was on course for the best month in eight years, helped by increased inflows to buy Taiwan shares.
The U.S. dollar hovered around a five-month low against a basket of six major currencies as investors cut holdings in the greenback after Ms. Yellen’s comments on Tuesday. Ms. Yellen expressed caution about raising interest rates, highlighting external risks such as slower global growth.
Chicago Fed President Charles Evans on Wednesday underscored that stance, saying a “very shallow” series of interest rate hikes over the next few years is appropriate to buffer the U.S. economy from outside shocks and the risk of inflation slipping too low.
Emerging Asian currencies are likely to maintain support from receding expectations of Fed tightening in the near term, analysts and traders said.