Peso weakens on US inflation, hawkish signals from Fed
The peso weakened after inflation in the US rose to its highest level in four decades, raising expectations for a rate hike by the Federal Reserve.
The peso closed at P51.34 to the dollar Friday, against its P51.235 close Thursday, according to the Bankers Association of the Philippines.
The currency also weakened from the week-earlier P51.14 finish.
The peso opened at P51.36, posting a low of P51.37 and a high of P51.29.
Dollar trading volume fell to $913.88 million from $937.4 million in the previous session.
A trader said in an email that the peso depreciated as caution set in after US inflation came in stronger than expected, strengthening the case for monetary policy tightening.
The US consumer price index rose 7.5% year-on-year in January, the largest headline number in four decades.
The economist consensus in a Reuters poll was 7.3%. The December inflation rate was 7%.
The peso also weakened after hawkish signals from a Fed official, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
St. Louis Federal Reserve Bank President James Bullard said Thursday that he would like to see a full percentage point increase in interest rates by July. Mr. Bullard was speaking to Bloomberg after the release of the inflation data.
After the Fed’s policy review last month, Fed Chairman Jerome H. Powell said monetary authorities have considered kicking off the process of raising interest rates by March. – Luz Wendy T. Noble
