Peso closes weaker at end of 2021 as Fed acts vs. inflation
The peso closed 6.2% weaker year-on-year on the last trading day of 2021, as the Federal Reserve adopted a more hawkish stance in order to deal with inflation.
The peso closed at P50.999 to the dollar Friday, little changed from its P51 finish Wednesday, according to the Bankers Association of the Philippines.
The market was closed Thursday for the Rizal Day holiday.
Week-on-week, the peso also declined from its P50.04 finish on Dec. 24.
The peso’s Friday finish was weaker by 6.2% from its P48.023 close on Dec. 29, 2020.
“The currency was considerably weaker than the previous year’s close as the Federal Reserve turned more hawkish in its policy stance amid the lingering risk of entrenched elevated inflation in the US,” a trader said in an email.
Fed officials this year accelerated their timetable to taper off the US central bank’s asset purchases. In the Fed’s policy review earlier this month, officials said they expect up to three rate hikes by 2023.
US inflation rose 6.8% in November, the highest since 1982, Reuters reported.
The peso opened at P50.995. The low was P51, while the high was P50.92.
Dollar trading volume dropped to $586.35 million Friday against $1.342 billion Wednesday.
“The peso was nearly unchanged (from its previous finish) due to thin trading volumes and as market participants remained on the sidelines for the holiday season,” the trader said.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso remained relatively weak as new coronavirus infections rose in recent days.
Active cases rose by 2,961 Friday, bringing the total to 14,233, according to the Department of Health. — Luz Wendy T. Noble
