Peso continues to climb

THE PESO continued to strengthen against the dollar on Wednesday ahead of the Jackson Hole Economic Policy Symposium amid the absence of catalysts offshore and at home, as well as a rise in inflows brought by Japan Tobacco Inc.’s (JTI) acquisition of Mighty Corp.

The peso closed at P51.22 versus the greenback yesterday, gaining two centavos from Tuesday’s finish of P51.24 per dollar.

The peso opened the session at P51.22 against the dollar. Its intraday trough was seen at P51.32 versus the greenback, while its best showing was at P51.09-to-the-dollar.

One trader said the peso climbed against the greenback as the market is on a wait-and-see mode ahead of a gathering of global central bankers in Jackson Hole, Wyoming on Friday.

“The peso just moved sideways today, due to lack of fresh leads and as investors await on the sidelines ahead of the Jackson Hole Economic Policy Symposium,” the trader said by e-mail on Wednesday.

Reuters reported the event’s highlights would be speeches from US Federal Reserve Chair Janet L. Yellen as well as European Central Bank (ECB) President Mario Draghi.

“The downward bias might be attributed to political noise in the US and possibly some BSP intervention,” the trader noted. The Bangko Sentral ng Pilipinas sometimes steps in during the trading session to temper any sharp swings from the peso versus the dollar.

Meanwhile, another trader said the local unit ended higher against the greenback due to large inflows brought about by JTI’s buyout of Mighty’s assets.

“The main story is because there was a large inflow, which I think had something to do with the Japanese company’s acquisition of Mighty. That’s why volume was also large because the peso was bought,” the trader said by phone on Wednesday. JTI announced on its Web site on Tuesday that it would pay $936 million or P46.8 billion to buy the assets of Mighty.

Trading volume was at $949.1 million on Wednesday, jumping from the $569.2 million that changed hands on Tuesday.

For today, one trader sees the exchange rate settling at P51.15 to P51.40, while the other trader said the peso could range within P51.05 to P51.35-to-the dollar.

“The peso might appreciate amid likely weak US data on manufacturing and services,” one trader said.

Asian currencies were steady on Wednesday, supported by improving risk sentiment due to easing concerns over geopolitical risks in the region.

The dollar index, which tracks the greenback against a basket of six major currencies, was flat on the day at 93.513 after it gained 0.5% the previous session.

“Overall theme of receding risk aversion due to either US politics or US-North Korea situation, has boded well for risk sentiment, buoying equities and perhaps supporting inflows into the region,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. “Apart from China, most of the equity markets seem to be up. That is acting as a backstop for Asian currencies.”

The South Korean won led regional gains, up more than a quarter of a percent against the dollar.

The Indonesian rupiah inched down despite a surprise rate cut by Bank Indonesia on Tuesday to stoke lending and consumption.

With its first rate cut since October, the Indonesian central bank became the second major Asian economy to cut after India.

The Thai baht edged lower after its custom-cleared annual exports fell short of expectations, while the Malaysian ringgit too inched down after Malaysia’s consumer price index rose at a slower pace for the fourth month in a row. — Janine Marie D. Soliman with Reuters