Peso firms up on BSP intervention

MANILA, Philippines - The peso on Wednesday backed away from the P50-per-dollar territory after Central Bank's intervention that prompted banks to cash in. It closed at P49.89 per dollar, five centavos firmer than Tuesday’s two-year trough after banks failed to break the crucial P49.999 per dollar level for two days in a row. The local currency was locked in a tight trading range, opening weak at its intraday low of P49.999 per dollar and reaching a high of P49.84 per dollar. "The BSP [Bangko Sentral ng Pilipinas] was obviously there to prevent the dollar from closing at the P50 per dollar territory. Banks just trimmed their long position because it was obvious they would not be successful. It has been two days since they tried to break P49.999 but failed," a trader said. A "gentlemen’s agreement" that required banks to halve their dollar purchases from $50 million, or 20% of their unimpaired capital, kept banks from loading up on the US currency despite lingering worries over the health of the global economy, traders said. "We buy on dips. Risk aversion is still there," a trader said. A lack of demand from importers covering their dollar requirements also gave the peso support. "There’s no commercial demand so the volume was meager. The trading range was very narrow," a trader said. — BusinessWorld