MANILA – The peso soared against the dollar on Wednesday, hitting its strongest level in six months as it briefly breached the P49 level intraday, as it strengthened in the offshore market.
The local currency finished at P50.04 against the greenback yesterday, gaining 10 centavos from its P50.14-per-dollar close seen on Friday.
Wednesday’s finish was also the peso’s best level since it ended at P49.91-to-the-dollar last June 19.
The peso traded stronger the whole day after it opened the session at P50.03 versus the dollar, while its intraday high was seen at P49.96. Its worst showing for the day, meanwhile, was at P50.05 to the greenback.
Dollars traded declined to $523.1 million on Wednesday from the $740.8 million that changed hands in the previous session last week.
“The peso appreciated as the offshore dollar-peso market has been trading stronger,” a trader said over the phone.
Another trader shared the same sentiment, adding that the peso’s ascent is in line with the movement of other Asian currencies.
“The Asian currencies are moving higher as the peso is leading gains, where the offshore market has been aggressive in selling dollar-peso lately,” another trader said.
Asked for the main driver of the boost in offshore trading, the second trader noted reductions in long dollar positions following the weakness of the local unit this year.
“I think it’s an adjustment. For this year, we’ve seen the weakness of the peso was really significant. And towards the yearend, we’re seeing positions taken out. [I guess, they’re winding up their] position as the year ends,” the second trader said.
Meanwhile, another trader attributed the stronger peso to the lack of fresh leads in the US.
For today, two traders said the peso might play within P49.90 to P50.15 against the dollar, while the third trader gave a slightly wider range of P49.90 to P50.20.
“The local currency is likely to follow its appreciating trend as traders lock in profits before the year ends,” the third trader noted, adding that the December US consumer confidence data released early today will be monitored.
Most Asian currencies edged higher against the US dollar on Wednesday, with the Philippines leading the gains after posting a narrower budget deficit in November — the latest addition to a run of good economic news.
The US dollar was flat, with the dollar index which measure the greenback against six major rivals, down 0.07% at 0523 GMT.
Globally, sentiment was buoyed by oil prices rising to 2-1/2 year highs.
The South Korean won was up 0.08%, hitting its highest since April 2015.
The Taiwan dollar was unchanged by remarks from central bank Vice-Governor Yang Chin-long who said on Wednesday that the Taiwan dollar’s strengthening this year mostly reflects the weakening trend of the US dollar.
The Singapore dollar was up 0.2%, its highest since Sept. 20.
But China’s yuan extended its losses for a second session on a softer fixing and rising corporate dollar demand, traders said.