Peso improves to 45-level vs. USD in morning session

By Joann Santiago

MANILA, Oct. 9 (PNA) — The Philippine peso strengthened to the 45-level to the greenback in Friday’s morning session at the Philippine Dealing System (PDS) minutes after the Federal Reserve meeting last September showed the reasons for its decision to keep rates steady.

It appreciated to as much as 45.91 after opening the trade at 46.00, which in turn was its weakest during the session.

“It is mainly because of the dovish comment of the FOMC,” a trader told PNA in an interview.

The trader said regional currencies registered the same trend minutes after the Federal Open Market Committee (FOMC) meeting last month showed that most Fed officials favor the decision to keep rates for now.

Part of the minutes states that: “After assessing the outlook for economic activity, the labor market, and inflation and weighing the uncertainties associated with the outlook, all but one member concluded that, although the U.S. economy had strengthened and labor underutilization had diminished, economic conditions did not warrant an increase in the target range for the federal funds rate at this meeting.”

“They agreed that developments over the intermeeting period had not materially altered the Committee’s economic outlook,” it said.

It, however, noted that “nevertheless, in part because of the risks to the outlook for economic activity and inflation, the Committee decided that it was prudent to wait for additional information confirming that the economic outlook had not deteriorated and bolstering members’ confidence that inflation would gradually move up toward two percent over the medium term.”

Slower growth in China as well as contractions in other countries such as Japan, Canada and Taiwan were also considered by the Fed.

“It was noted that the expected path of the federal funds rate, rather than the exact timing of the initial in- crease, was most important in influencing financial conditions and thus the outlook for the economy and inflation,” it said.

“The Committee reiterated its expectation that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run,” it added.

With this, the trader expects the local unit to remain strong the whole day and end the week at 45.90-level.

Volume of trade in the morning trade already reached USD 711.7 million. (PNA)