THE PESO strengthened versus the dollar on Friday following the central bank’s decision to cut benchmark interest rates to fresh record lows.
The local unit closed at P48.23 against the dollar on Friday, rising by 8.5 centavos from its P48.315 finish on Thursday, data from the Bankers Association of the Philippines showed.
The peso opened Friday’s session at P48.27 to a dollar which was also its weakest showing. Its intraday best was logged at P48.21 against the greenback.
Dollars traded declined to $660.6 on Friday from $692.3 million the previous day.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso rose after the Bangko Sentral ng Pilipinas (BSP) slashed key interest rates to new record lows.
“This will help boost economic recovery prospects in terms of further reducing borrowing costs, spur greater demand for loans that boost investments, jobs, economic opportunities, and more gains in the local financial markets,” Mr. Ricafort said in a text message.
The BSP Monetary Board on Thursday unexpectedly slashed benchmark interest rates by another 25 basis points (bps), citing a critical need for policy support amid a slower pace of recovery and continued uncertainty as coronavirus infections surge anew in certain economies.
This brought down the rates on the BSP’s overnight reverse repurchase, lending and deposit facilities to new record lows of 2%, 2.5%, and 1.5%, respectively.
The latest easing move followed a “prudent pause” by the BSP since its June meeting. The central bank has already cumulatively lowered interest rates by 200 bps this year.
Another trader said the rate cut increased demand for the peso. — KKTJ