Peso to trade sideways vs dollar before Fed, BSP meetings

THE PESO could move sideways against the dollar this week as players continue to monitor developments between the United States and Iran and anticipate the policy meetings of the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).

On Thursday, the currency climbed by 4.5 centavos to close at P61.35 versus the greenback from its P61.395 finish on Wednesday, based on Bankers Association of the Philippines data posted on its website.

This was the peso’s strongest close since May 11’s P61.15. Philippine financial markets were closed on June 12 (Friday) for Independence Day.

Week on week, the local unit rose by 12 centavos from its P61.47-a-dollar finish on June 5.

The peso’s rebound came amid a turbulent week that saw the US and Iran exchange fresh strikes, endangering their fragile ceasefire.

For this week, the peso could move between P61.20 and P61.60 against the greenback as markets continue to track developments between the US and Iran and weigh US data releases that could affect the Fed’s policy decision at its June 16-17 meeting, a trader said in a phone interview.

For his part, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the local unit could range from P61.10 to P61.60 versus the dollar before the Fed and BSP policy meetings.

“The peso exchange rate was relatively stable versus the US dollar recently amid possible smoothening of market volatility at P61.60-P61.70 levels [and] possible future BSP rate hikes, especially at the next rate-setting meeting on June 18, 2026 to help stabilize the peso exchange rate, importation costs, and, in turn, also better manage inflation and inflation expectations,” he said.

The Federal Reserve is expected to hold rates steady this week at Kevin Warsh’s first meeting as Fed chair, with a strong majority of economists in a Reuters poll predicting that the US central bank would keep rates unchanged for the rest of 2026.

Traders, however, have fully priced in a 25-basis-point (bp) hike by December, a sharp turn from expectations of two rate cuts this year before the Iran war erupted at the end of February.

Meanwhile, a BusinessWorld poll of 20 analysts showed that 19 expect a second straight rate hike from the BSP’s policy-setting Monetary Board on Thursday, with 15 seeing a 25-bp bump and four penciling in a bigger 50-bp increase amid persistent price pressures.

The dollar steadied on Friday but remained on track for a weekly loss, as markets monitored negotiations over a deal that could end the Middle East conflict, Reuters reported.

The US dollar index, which measures the greenback against a basket of six currencies, was flat at 99.75 after hitting a one-week low on Thursday.

Investors have tended to buy the safe-haven dollar when tensions in the Iran war flare, and sell it in favor of riskier assets such as stocks when peace talks appear to make progress.

US and Pakistani leaders forecast a Sunday signing of a long-elusive framework agreement to end fighting between the United States and Iran, but Tehran cast doubt over the timing and hardline protesters in Iran voiced opposition. — A.M.C. Sy with Reuters