Peso weakens amid US rate hike concerns; losses limited by remittances

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THE peso closed weaker after the dollar strengthened in Asian trading on concerns US rates may head higher.

The peso closed at P50.72 against the dollar yesterday, against its P50.68 finish on Thursday. It opened at P50.65, with the intra-session low as P50.75. The high was P50.63.

Dollar volume rose to $751.65 million, from $604.7 million on Thursday.

“The peso traded a bit lower today as the dollar index corrected (upward) in tsian trading so we just rode that movement,” a trader said.

Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said concerns about a rate hike by the US Federal Reserve persisted.

“The peso depreciated today, as the dollar continued to correct upwards amid persistent US rate hike concerns, despite inflation uncertainty in the US,” Mr. Dumalagan said.

The likely Fed rate hike was mainly driven by an improving labor market amid continuing low inflation.

Ruben Carlo O. Asuncion, chief economist of Union Bank of the Philippines, said market participants focused on upbeat economic and corporate growth in the US.

“Investors are putting a premium on economic growth and earnings growth in the final stretch of 2017,” Mr. Asuncion said.

“Initially we thought the peso would plunge, but we saw peso buying in the afternoon session. The surge of remittances [yesterday] tempered the slump,” the first trader noted.

He added that the peso was buoyed by the Bangko Sentral ng Pilipinas announcement that it is not bound to follow Fed rates higher. — Karl Angelo N. Vidal