MANILA - (UPDATE) The peso held at the P49 per dollar level on Tuesday, boosted by foreign fund inflows and as the greenback weakened ahead of a speech by US Federal Reserve Chair Janet Yellen.
The peso opened at P49.64 from P46.705 on Monday. The local unit erased the entire year's losses against the dollar on Tuesday and reached its strongest in over two months.
"The performance of the peso has been very much corelated with the performance of the stock market. It is due to the hot money inflow going on right now," AB Capital investment manager Migs Lopez told ANC'S "Market Edge with Cathy Yang."
"The hot money right now is dictating the move of the peso," he said.
Analysts predict the peso could weaken past the P50 level this year as the Federal Reserve raises interest rates.
An exchange rate that is "closer to 50" will help boost domestic consumption, First Metro Asset Manager president Gus Cosio told ANC.
"Why? because the sizes of wallets of OFW (overseas Filipino worker) beneficiaries become larger with the weaker peso, more peso for their remittances. This fuels a lot of domestic spending," he said.
"Same thing goes for BPOs. At P50, they’re more encouraged to bring business around here than if the peso were stronger. I’m not really in favor of a strong peso," he said.