Peso may rise further before Fed meeting

THE PESO may strengthen further against the dollar this week but stay at the P58 level ahead of the US Federal Reserve’s first policy meeting for the year.

The local unit closed at P58.31 per dollar on Friday, surging by 38.20 centavos from its P58.692 finish on Thursday, Bankers Association of the Philippines data showed.

Week on week, the peso likewise rose by 33 centavos from its P58.64 finish on Jan. 17.

The peso gained against the dollar on Friday after US President Donald J. Trump said he wants the Fed to cut interest rates, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso tracked dollar weakness overnight after Trump said that he would demand interest rates to drop immediately at the World Economic Forum,” a trader said by phone.

The dollar was further dragged down after the Bank of Japan raised interest rates to a 17-year high, the trader added.

For this week, the trader said the peso may trade sideways against the dollar as the market awaits signals from the Fed’s policy meeting on Jan. 28-29.

The trader sees the peso moving between P58.20 and P58.50 per dollar this week, while Mr. Ricafort expects it to range from P58.10 to P58.60.

The US dollar slid on Friday and was set for its biggest weekly loss in over a year after Mr. Trump suggested a softer stance on tariffs against China, adding to uncertainty about the trade policy that kept equity markets on edge, Reuters reported.

Mr. Trump told Fox News on Thursday his recent conversation with President Xi Jinping was friendly and he thought he could reach a trade deal with China.

The US dollar dropped as much as 0.8% against a basket of currencies on Friday before narrowing losses at the end of the day to be down 0.65%. But it still had its biggest weekly loss since November 2023, having lost 1.8% since Monday.

Meanwhile, Mr. Trump on Thursday said he wants the Federal Reserve to cut interest rates at a time the central bank has hit pause for an uncertain duration, arguing he understands monetary policy better than those charged with setting it.

The Fed last cut its overnight interest rate target by a quarter percentage point at its December policy meeting to between 4.25% and 4.5%. — A.M.C. Sy with Reuters