Peso recovers, closes at 50.13:$1

The peso closed in at its four-year high yesterday, recovering decisively after dropping on Wednesday following the military coup in Thailand.

The market appeared to have regained its footing with the peso closing at 50.13 to the dollar, up from Wednesday’s close of 50.185 to the dollar.

The peso even rose to a high of 50.08 but corrected immediately before posting a decent recovery at the end of the trading session, with total volume amounting to $493 million.

Analysts said the recovery of the peso was on the wave of a similar rally in Asian currencies as the dollar stepped back after the US Federal Reserve decided to keep its interest rates unchanged.

The Bangko Sentral ng Pilipinas (BSP) also kept its policy rates unchanged, saying that inflationary pressures did not present the need for monetary policy to tighten.

According to currency traders, currencies in the region were also buoyed by a rally in the Thai baht following its drop in the aftermath of the coup that ousted Prime Minister Thaksin.

Just before the Thai coup, the peso had reached its highest level in 51 months, touching a high of P50.06 to the dollar before closing at 50.12 to the dollar.

As the Arroyo administration tightened its fiscal consolidation program, BSP Governor Amando M. Tetangco Jr. said market enthusiasm is expected to remain well stoked and the peso to remain strong.

On the other hand, dealers in the market said the BSP has been conspicuously absent from the market, indicating that it was not the least bit worried about volatility problems.

Dealers said the BSP was not strongly intervening primarily because the appreciation of the peso has so far been orderly and gradual, causing little disruption that even exporters were not actively lobbying for intervention.