Peso rebounds ahead of BSP policy meeting

 Peso rebounds ahead of BSP policy meeting

THE PESO rebounded versus the greenback after the enactment of measures that could help boost economic recovery and ahead of the central bank’s policy review.

The local unit closed at P52.39 a dollar on Wednesday, stronger by five centavos from its P52.44 finish on Tuesday, based on Bankers Association of the Philippines data.

The peso opened Wednesday’s session at P52.42 per dollar, which was also its weakest showing. Meanwhile, its intraday best was at P52.33 against the greenback.

Dollars traded rose to $1.015 billion on Wednesday from $953 million on Tuesday.

The peso strengthened after the adoption of a new measure that could help support the economy’s recovery from the pandemic, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

President Rodrigo R. Duterte on Wednesday signed Executive Order 166 which is a 10-point policy agenda prepared by economic managers.

The measures include the expansion of the vaccination program, relaxation of requirements for international travel and the further reopening of the economy.

On Monday, Mr. Duterte also signed a law that allows full foreign ownership in more public services such as telecommunications and domestic shipping, a move that would further liberalize the Philippine economy.

Republic Act No. 11647, which amends the 85-year-old Public Service Act, excludes telecommunications, domestic shipping, railways and subways, airlines, expressways and tollways, and airports from the definition of a public utility. This means they will no longer be subject to the 40% foreign ownership cap for public utilities under the Constitution.

The government is hoping the measures will help the Philippine economy recover from the pandemic by creating much-needed jobs.

Meanwhile, a trader attributed the peso’s strength to profit taking ahead of the policy review of the Bangko Sentral ng Pilipinas (BSP) this Thursday.

A BusinessWorld poll last week showed 15 out of 17 analysts expect the Monetary Board to keep benchmark interest rates on hold on March 24, citing earlier signals from the BSP chief that the regulator will remain supportive of economic recovery.

However, analysts said they will be expecting more forward guidance from the BSP on its imminent tightening amid expectation of faster price increases due to the war in Ukraine and monetary policy normalization in the US.

For Thursday, Mr. Ricafort gave a forecast range of P52.30 to P52.45 versus the dollar, while the trader said he expects the local unit to move within P52.30 to 52.50. — L.W.T. Noble