Peso recovers, closes at 45.24

07/15/2008

The peso recovered yesterday strengthening to 45.24 per dollar.

It closed 42 centavos better than last Friday’s 45.66 finish at the Philippine Dealing System. It opened weaker at 45.71 against the previous trading day’s 45.70 start.

Its closing rate was its highest trade during the day while its weakest was at 45.72 bringing the day’s average at 45.49, weaker than Friday’s 45.74.

Volume of trade further surged to $798.7 million from $770.75 at the end of last week’s trading.

Traders attributed the unit’s improvement to the expected tightening in the rates of the Bangko Sentral ng Pilipinas on Thursday during the meeting of the policy-making Monetary Board of the Central Bank.

BSP last rate hike was on June 5, 2008 when it raised rates by 25 basis points to address the continued increase of inflation, with the May inflation at 9.5 percent.

This brought the central bank’s borrowing rate to 5.25 percent while lending rate went up to 7.25 percent.

Last June, inflation hit double digit for the first time after several years at 11.4 percent, higher than the central bank forecast, thus, the expectation of higher rates to further rein in the faster rate of price increases.

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