THE PESO weakened further on Wednesday to hit a four-month low against the dollar due to hawkish comments from US Federal Reserve officials.
The local currency closed at P56.21 versus the dollar on Wednesday, declining by seven centavos from Tuesday’s P56.14 finish, data from the Bankers Association of the Philippines’ website showed.
This was the peso’s worst showing in more than four months or since its P56.22 finish on Dec. 1, 2022.
The local unit opened Wednesday’s session at P56.15 per dollar. It climbed to as high as P55.95 during the day, while its worst showing was at P56.23 versus the greenback.
Dollars traded went down to $1.236 billion on Wednesday from the $1.418 billion recorded on Tuesday.
The peso weakened as the dollar rose amid hawkish remarks from Fed officials, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The dollar pulled further above last week’s one-year low on Wednesday, as investor focus honed in on what the Fed may have to do to tame inflation, rather than on the recent problems in the US banking sector, Reuters reported.
The dollar index, which gauges the greenback against six major peers, ticked up 0.22% to 101.94 after a choppy few days.
St. Louis Fed chief James Bullard told Reuters in an interview that he leans toward 75 basis points (bps) of additional tightening, versus the market consensus for one more 25-bp hike next month and then the potential for as many as two quarter-point cuts later this year.
By contrast, Atlanta Fed President Raphael Bostic said in an interview with CNBC that he expects just one more quarter-point hike, followed by an extended pause.
The US central bank raised the fed funds rate by 25 bps last month to 4.75%-5%. It has hiked rates by 475 bps since March 2022.
“The peso weakened anew as mixed reports from US-listed company earnings raised concerns on the health of the global economy this year,” a trader said in an e-mail.
For Thursday, the trader said the peso could recover against the dollar on expectations of a strong Eurozone inflation report and weak US initial jobless claims data.
The trader expects the peso to trade between P56.25 and P56.50 a dollar on Thursday, while Mr. Ricafort sees it moving from P56.10 to P56.30. — A.M.C. Sy with Reuters