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Peso strengthens to new one-month high

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THE PESO logged a fresh over one-month high against the dollar on Tuesday amid growing hopes for a US Federal Reserve rate cut by September.

The local unit closed at P58.44 per dollar on Tuesday, strengthening by 6.2 centavos from its P58.502 finish on Monday, Bankers Association of the Philippines data showed. This was the peso’s best finish since its P58.42-a-dollar close on May 29.

The peso opened Tuesday’s session slightly weaker at P58.54 against the greenback. Its weakest showing was at P58.56, while its intraday best was at P58.43 versus the dollar.

Dollars traded rose to $1.18 billion on Tuesday from $1.07 billion on Monday.

The peso strengthened as the market expects the US central bank to cut interest rates by September, the first trader said by phone.

The local unit rose against a generally weaker dollar due to Fed easing bets, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.

Some players also sold dollars ahead of Fed Chair Jerome H. Powell’s two-day testimony before the US Congress scheduled to begin overnight, the second trader added.

The US dollar index was last up 0.1% at 105.06, rising from an overnight low of 104.80, a 3-1/2-week trough, Reuters reported. The index slumped nearly 1% last week, exacerbated by Friday’s payrolls report, which boosted bets for the Fed to soon start cutting rates.

For Wednesday, the second trader said the peso may continue to strengthen on expectations of dovish signals from Mr. Powell. The trader sees the peso moving between P58.30 and P58.55 per dollar on Wednesday, while the first trader expects it to range from P58.30 to P58.70. Mr. Ricafort gave a forecast range of P58.35 to P58.55. — AMCS with Reuters

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