Peso snaps winning streak on Fed hike bets

By Melissa Luz T. Lopez, Senior Reporter
THE PESO ended its five-day uptrend on Friday to log its weakest showing in three days, just as bets of another rate hike in the United States next month became more certain.
The local unit closed the week at P52.96 versus the dollar, 39 centavos weaker than Thursday’s P52.57 rate which was a five-month low, to wipe out the sharp drop posted that day.
This is the currency’s weakest performance since the P53.025-per-dollar rate on Tuesday.
The peso lost its strength during the entire session as it opened at P52.87 against the greenback. Its best showing was at P52.83, while it hit an intraday low of P52.97 before settling at the closing rate.
Sought for comment, two traders attributed the peso’s slump to a stronger dollar, which gained strength from the outcome of the policy meeting of the US Federal Reserve.
“The peso briefly weakened which can be attributed to bargain-hunting for the greenback following the upbeat US initial jobless claims data and muted Fed remarks increased bets of a December Fed rate hike,” one trader said.
The Fed affirmed that the US economy remains on solid footing, reaffirming its hawkish monetary policy stance and setting the stage for another rate hike.
The peso also tracked the downward move of other currencies in the region against the greenback, according to Reuters.
A second trader affirmed that the peso depreciated due to broad dollar strength overnight, as market players were assured that the Fed will proceed with another hike worth 25 basis points during their December meeting.
The trader added that the peso traded within range for the rest of the session, without large inflows seen the previous days to help boost the currency.
Dollars traded on Friday amounted to $897.5 million, down from the $1.353 billion which exchanged hands the previous session. A trader attributed the higher-than-usual volumes the past few days to equity inflows for a follow-on offering by a listed conglomerate.