Peso continues to rise, closes at 41.24 to $1

The peso together with most regional currencies rallied against the dollar yesterday after the US Federal Reserve and other central banks in Asia took steps to ease the credit crunch.

At the Philippine Dealing System (PDS), the high-yielding peso rose as far as 41.10 to the dollar during intraday trading after opening  at 41.200 to $1.

At the close, the local currency  gained by another seven centavos to settle at 41.240 from Wednesday’s close of 41.310 to $1, helped by solid capital inflows.

Total trading amounted to $520.14 million on an average rate of 41.142 to $1.

 The peso is now trading at its highest level since touching 41.230 on April 19, 2000.

“The peso is still rising because of the strong flows and overseas Filipino workers’ remittances are coming in,” said one trader.

He noted that offshore funds were also bullish on the peso.

The Fed launched a temporary short-term lending facility on Wednesday to ease credit market strains in concert with market-calming action by its counterparts in Europe, Canada and Britain.

“The concerted moves by the central banks are intended to ease year-end funding pressures and improve the distribution of liquidity,” said Thomas Lam, Treasury economist at United Overseas Bank.

“LIBOR rates have responded by continuing to ease ... At least from a preliminary standpoint, market psychology appears to have improved,” he said.

Since the start  of the year, Asia’s best performing currency has appreciated by nearly 19 percent against the dollar.

The South Korean won hit 923.60 to $1, up a third of a percent from late Asian trade on Wednesday. The Singapore dollar was also up at 1.4409 while the Chinese yuan rallied at 7.3710 to the dollar.