Peso weakens after Fed sets timetable for winding down bond buying
The peso weakened against the dollar Friday amid hawkish signals from the US Federal Reserve.
The peso closed at P50.02 Friday against its P49.96 finish Thursday, according to the Bankers Association of the Philippines.
The peso opened at P49.95, with the intraday high at P49.89 and the low at P50.04.
Dollar volume rose to $900.65 million on Friday from $826.63 million a day earlier.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso was slightly weaker, but noted it was still the strongest it has been in more than a month, following remarks by the Fed.
“Some central banks already raised key short-term interest rates, such as the UK,” he said.
The Fed on Wednesday said it will end its bond purchase program – a key component of its quantitative easing program – in March, with officials expecting to raise rates three times next year as the US battles inflation.
Mr. Ricafort said such Fed action will prevent inflation from spiraling further, or at least manage inflation expectations.
He noted the Bangko Sentral ng Pilipinas keeping its key policy rate at 2%, but added that the central bank has raised its inflation estimates for the next two years.
“The peso remains relatively strong largely due by the seasonal surge/culmination in OFW remittances and conversion to pesos, especially with almost a little over a week before Christmas in view of the holiday spending rush,” he said. – Jenina P. Ibañez
