THE peso-dollar rate has remained stable given the Bangko Sentral ng Pilipinas' readiness to adjust policy and sustained dollar inflows, an economist said.The exchange rate remains at 'familiar ranges,' Rizal Commercial Banking Corp. chief economist Michael Ricafort said in a report, after 'recent signals from local monetary authorities that they are ready to use tools available in the policy toolkit to help stabilize inflation...'.This could support more comfortable interest rate differentials that would also strengthen the currency, he added.Likewise, Ricafort said that remittances from overseas Filipino workers, business process outsourcing revenues, exports, foreign investments, and foreign tourism receipts were fundamentally providing a buffer for the peso.The resumption of group tours from China, starting in January 2023 after the world's second-largest economy reopened from Covid-19 restrictions, was particularly cited.The peso closed stronger versus the greenback at $55.17:$1 from $55.24:$1 previously. While down from the year to date high of P53.68:$1 hit last Feb 3, the currency is still up from the P55.755:$1 hit on the last trading day of 2022.The peso fell to P59 per dollar in October last year as financial markets anticipated aggressive moves by the US Federal Reserve to raise interest rates, which boosted the greenback against major currencies.'The trend of the US dollar/peso exchange rate [is] also a function of global/regional trend of the US dollar, at times, though in a positive manner recently with the healthy downward correction in the US dollar vs. major global currencies since the lower-than-expected US CPI/inflation data ... that would reduce the Fed's (US Federal Reserve's) aggressiveness in raising rates for the coming months,' Ricafort said.US inflation cooled for second straight month in January and results for February will be released this Tuesday, US time. The Fed, however, has warned that inflation could again pick up and that interest rates could head higher than initially expected.Locally, inflation finally eased in February to 8.6 percent from the previous month's unexpected surge to a new 14-year high of 8.7 percent. This prompted monetary authorities to raise key interest rates by 50 basis points (bps), bringing total hikes since last year to 400 bps.The US Fed will next meet on Feb. 21-22. The Bangko Sentral ng Pilipinas' policymaking Monetary Board will hold its own meeting on March 23.'The BSP remains prepared to adjust its monetary policy settings as necessary to prevent inflation expectations from becoming disanchored and safeguard the inflation target over the policy horizon,' the central bank said last week.
