THE PESO weakened further against the dollar on Thursday following the minutes of the latest meeting of the US Federal Reserve and amid trade negotiations between Beijing and Washington.
The local currency closed Thursday’s trading session at P53.48 versus the greenback, 5.5 centavos weaker than the P53.425-per-dollar finish on Wednesday.
The peso traded weaker the whole day, opening the session at P53.46 per dollar. It declined to an intraday low of P53.51, while its best showing for the day was at P53.45 per US currency.
Dollars traded climbed to $576.45 million from the $385.15 million that exchanged hands the previous day.
“The peso weakened after the August minutes reinforced the hawkish policy direction of the US Federal Reserve this year,” a foreign exchange trader said in an e-mail on Thursday.
Federal Reserve officials discussed raising interest rates soon to counter excessive economic strength but also examined how global trade disputes could batter businesses and households, minutes of the US central bank’s last policy meeting showed.
The Fed, which released the readout from its July 31-Aug. 1 meeting on Wednesday, has been raising rates gradually since 2015 and is now concerned the economy is so strong that inflation could rise persistently above its 2% target.
Fed policy makers left rates unchanged at their last meeting, but their discussion made it clear they are considering another rate hike soon. The Fed has raised rates twice this year and is widely expected to tighten policy again next month.
“[The minutes] also increased expectations of a likely Fed rate hike in September and another in December,” the trader added.
Meanwhile, another trader said the peso moved within a tight range during the trading session even as the dollar recovered against major and Asian currencies.
“The pair seems to be trading within the range for almost a week now. It doesn’t want to go beyond the P53.50 level, although we’re seeing demand at that level,” the trader said in a phone interview.
“We saw the minutes of the Fed but there’s no surprise to it. The Fed had the same rhetoric.”
The trader also noted that investors are still monitoring the trade negotiations between the US and China as well as the economic situation in Turkey.
For Friday, the first trader said the peso will move between P53.30 and P53.50, while the other gave a P53.40-P53.60 range. — Karl Angelo N. Vidal with Reuters

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