News on possible Chinese stimulus program lifts peso vs dollar

MANILA, March 28 (PNA) — The peso improved against the U.S. dollar Friday on general strengthening of regional currencies and news about the possibility that China will implement a fiscal stimulus.

It appreciated by P0.16 after finishing at 44.88 from 45.04 Thursday.

BPI lead economist Emilio S. Neri Jr., in an interview by PNA, said another factor for the peso’s strengthening is the lower-than-expected tightening measure of the Bangko Sentral ng Pilipinas (BSP).

On Thursday, central bank’s policy making-Monetary Board (MB) hiked by one percentage points banks’ reserve requirement (RR) but maintained key policy rates.

This brought the RR for universal and commercial banks (U/KBs) to 19 percent, thrift banks’ to seven percent and rural banks’ to five percent.

On the other hand, the overnight borrowing or reverse repurchase (RRP) rate is at record-low of 3.5 percent and the overnight lending or repurchase (RP) rate is at 5.5 percent.

“It’s impact on interest rates is minimal compared to when it’s the policy rates,” Neri said.

He said the report about the lower jobless claims in the U.S. in the week ending March 21 was not generally factored in during the day.

The U.S. Labor Department said jobless claims posted its lowest in almost four months last week when it went down by 10,000 to 311,000.

The peso started the day at 44.99, sideways from 44.95 Thursday.

It traded between 44.87 and 45.05 bringing the average to 44.99.

Volume of trade reached US$ 857.9 million, slightly higher than the US$ 833.2 million a day ago.

Neri expects the peso to trade between 44.75 and 45.10 next week.

He explained that the 44-level is just temporary for the peso given the continued tapering of the Federal Reserve’s stimulus program.

“But while the next Fed tapering has yet to be announced speculators would enjoy some heyday,” he added. (PNA)