THE PESO rose further on Thursday as the dollar was weighed down by market concerns over the US Federal Reserve’s credibility after US President Donald J. Trump said he wants to replace Fed Chair Jerome H. Powell.
The local unit closed at P56.605 versus the greenback on Thursday, appreciating by 10.6 centavos from its P56.711 finish on Wednesday, Bankers Association of the Philippines data showed.
The peso opened the session stronger at P56.65 against the dollar. Its intraday best was at P56.57, while its worst showing was at P56.695 versus the greenback.
Dollars exchanged inched up to $1.56 billion on Thursday from $1.55 billion on Wednesday.
“The dollar-peso traded lower on broad dollar weakness on concerns over the Fed’s independence on reports that Trump might announce a new Fed chair,” a trader said in a phone interview.
The dollar slipped to multi-year lows against the euro and Swiss franc on Thursday as concerns about the future independence of the US Federal Reserve undermined faith in the soundness of the country’s monetary policy, Reuters reported.
According to a Wall Street Journal report, Mr. Trump had toyed with the idea of selecting and announcing Mr. Powell’s replacement by September or October, aiming to undermine his position.
Mr. Trump called Mr. Powell “terrible” on Wednesday for not lowering interest rates sharply, while the Fed chair was telling the Senate that policy had to be cautious as the president’s tariff plans were a risk to inflation.
Markets have nudged up the chance of a rate cut at the Fed’s next meeting in July to 25%, from just 12% a week ago, and are pricing in 64 basis points (bps) of cuts by yearend, up from around 46 bps last Friday.
The dollar was under broad pressure as the euro gained 0.6% to $1.1729, its highest since September 2021.
Sterling rose 0.65% to $1.3753, its highest since October 2021, while the dollar was at its lowest in more than a decade on the Swiss franc at 0.7983. The franc also struck a record peak on the yen around 180.55 overnight.
The greenback lost nearly 1% on the yen to 143.91, while the dollar index sank to its lowest since early 2022 at 97.09 =USD.
Mr. Trump’s chaotic tariff policies are also coming back into focus as the clock ticks down to his July 9 deadline for trade deals.
JPMorgan on Wednesday warned the hit from tariffs would slow US economic growth and lift inflation, resulting in a 40% chance of a recession.
Meanwhile, the peso’s rise was also supported by the continued decline in global crude oil prices from their recent highs as supply fears eased amid the ceasefire between Iran and Israel, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Oil prices were steady on Thursday after erasing earlier gains as investors remained cautious about the Iran-Israel ceasefire while also shifting focus to market fundamentals, Reuters reported.
Brent crude futures fell 11 cents or 0.2% to $67.57 a barrel by 0821 GMT. US West Texas Intermediate crude fell 8 cents or 0.1% to $64.84 a barrel.
For Friday, the trader said the peso could move between P56.40 and P56.80 versus the dollar, while Mr. Ricafort sees it ranging from P56.50 to P56.75. — A.M.C. Sy with Reuters
