THE peso hit a three-week high against the US dollar on Tuesday, buoyed by the upbeat sentiment in equities markets that advanced as investors cheered an agreement by the Group of 20 (G-20) finance ministers and central banks to continue implementing economic-stimulus measures to sustain the ongoing global recovery, traders said.
The local unit closed at 48.355 to the dollar, its strongest finish since August 18 when it settled at 48.255 at the Philippine Dealing System’s electronic exchange. It rose to as high as 48.350 and was up 0.5 percent from Friday’s close of 48.62.A total of $747.19 million changed hands, a heftier turnover compared with last Friday’s $579.62 million. The bunched-up inflows of remittances of Filipinos abroad during the three-day weekend break likely provided a further boost to dollar supply, traders said.
“A weekend agreement by the G-20 to keep economic stimuli running helped drive risk appetite and bolstered the view that interest rates would remain low,” wrote traders at Metropolitan Bank & Trust Co.
They saw initially support for the dollar at 48.50, which was immediately breached during the morning session. They were looking at a trading range of 48.20 to 48.90 for this week, and had set a “buy” strategy at 48.45 and “sell” at 48.75.
Traders said the pledge made by G-20 policymakers over the weekend had allayed concerns about the possibility of governments withdrawing the stimulus measures too soon amid signs of a global economic recovery.
Ahead of the G-20 meeting, International Monetary Fund managing director Dominique Strauss-Khan was reported on Saturday to have warned governments against withdrawing the stimulus measures too soon, saying such a move could derail the economic recovery.
Currency strategists at UOB Bank said, however, it was too early to say that markets had calmed down. “To be sure, until US markets [which were also closed on Monday for the Labor Day holiday] reopen...as liquidity returns gradually from the summer lull, and central bank meetings [Reserve Bank of New Zealand and Bank of England] come back into focus on Thursday, the net trajectory of markets this week remains up in the air.”
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