THE PESO weakened versus the greenback on Wednesday following signals from the US Federal Reserve of the possibility of earlier rate hikes. 

The local unit closed at P50.79 per dollar on Wednesday, depreciating by seven centavos from its P50.72 finish on Tuesday, based on data from the Bankers Association of the Philippines. 

The peso opened Wednesday’s session weaker at P50.78 per dollar. Its weakest showing was at P50.85, while its intraday best was at P50.75 versus the greenback. 

Dollars traded dropped to $781.67 million on Wednesday from $999 million on Tuesday. 

The peso retreated versus the greenback after a Fed official said interest rate increases could come sooner if inflation remains elevated, a trader said in an email.  

Reuters reported Tuesday that Fed Governor Christopher Waller said a more aggressive policy response may be implemented to curb elevated inflation. 

“If monthly prints of inflation continue to run high through the remainder of this year, a more aggressive policy response than just tapering may well be warranted in 2022,” Mr. Waller said. 

US inflation has been rising at an annual rate of 5% of four consecutive months, a trend last seen in 1990. Mr. Waller said he is now “greatly concerned” if such pace continues. 

Meanwhile, Mr. Ricafort attributed the peso’s weakness to higher oil prices. 

Fuel prices reached multi-year highs recently due to low supply as demand picked up in economies that are gradually easing restrictions.  

Reuters reported that Brent crude futures topped $86 a barrel on Monday, which is the highest since October 2018. Meanwhile, the US West Texas Intermediate futures reached $83.73, the highest since October 2014. 

For today, Mr. Ricafort gave a forecast range of P50.70 to P50.90, while the trader expects the local unit to move within P50.70 to P50.95 per dollar. — LWTN with Reuters