Peso hits new four-year high

MANILA, Philippines – The peso reached a new four-year high yesterday as high corporate demand and suspicion that US monetary authorities will provide new stimulus to the economy this week drove investors away from the greenback.

The local currency closed at 41.615 to a dollar yesterday, the strongest since April 2008. During the trading, the peso even strengthened to as much as 41.540.

“We saw good size of corporate demand (yesterday),” a trader said in a phone interview yesterday.

Dollars that traded were lower at $804.5 million from Friday’s $883.460 million.

Jonathan Ravelas, chief market strategist at the BDO Unibank Inc., said investors turned cautious on buying dollars as they expect the US Federal Open Market Committee, which will meet this week, to provide new stimulus measures to boost an ailing US economy,

“Stimulus bets pushed the greenback, causing currencies like the dollar-peso to gain groups,” Ravelas said in a text message.

The US Fed’s policy making body will meet this week to decide whether or not to provide new stimulus – either by cutting rates further or printing new cash to buy up government bonds – in a bid to boost domestic demand and thus, growth.

This was after a disappointing jobs report over the weekend which saw the US economy adding only 96,000 jobs for August, way below market consensus of 130,000.

The official US unemployment rate inched down to 8.1 percent from 8.2 percent during the same month but this was due primarily to a decline on jobseekers.

Analysts expect the peso to trade between 41.50 and 41.80 today. –(The Philippine Star)