MANILA, Philippines --- The peso vis-à-vis the US dollar opened to its strongest level since 2008 at P41.57 but toward the end of the day, selling pushed it back to P41.615 from a high of P41.620.
This would be the third straight week that the peso appreciated against the US dollar on hints and hopes that the US government will soon implement economic stimulus package when the Fed meets this week.
In Monday's closing, the peso weighted average was P41.596 with total volume of P804.5 million, lower compared to Friday's P883.46 million.
According to a Bloomberg report, the peso touched the strongest level in more than four years after US employment data prompted speculation the Federal Reserve will add to monetary-easing measures, boosting demand for emerging-market assets.
Payrolls in the world's largest economy rose by 96,000 last month, compared with the 130,000 median estimate in a Bloomberg survey and the 141,000 jobs created in July, the Labor Department said on Sept. 7. The local currency extended a three-week rally after the Bangko Sentral ng Pilipinas (Philippine central bank) said it may raise inflation targets for 2012 and 2013, and economists forecast policy makers will keep interest rates at record low this week.
"The peso is definitely benefiting from inflows of foreign money into equities" given the speculation on monetary easing, said Jose Vistan, head of research at AB Capital Securities Ltd. in Manila. "There's also increased confidence in the Philippine economy, with the possibility of a rating upgrade."
The country was upgraded one level to Ba2 by Moody's Investors Service in June last year, or two levels below investment grade. Standard & Poor's raised its rating one step to BB+ on July 4 this year, or one level below investment grade.
Gains in the peso may be limited before a government report tomorrow that may show exports shrank 2 percent in July following a 4.3 percent advance in June, based on the median forecast in a Bloomberg survey. Malaysia, Thailand and Taiwan also reported contraction in July shipments.
Bangko Sentral ng Pilipinas will keep its overnight rate at 3.75 percent on Sept. 13, according to 12 of 16 economists in a separate survey. Four predicted a cut to 3.5 percent. Monetary policy remains appropriate while the economy faces significant issues related to higher commodity prices, Deputy Governor Diwa Guinigundo said on Sept. 8. (Bloomberg)