THE PESO weakened versus the greenback on Tuesday as market participants were cautious due to hawkish signals from US Federal Reserve officials and tensions between Russia and Ukraine.
The local unit closed at P51.382 per dollar on Tuesday, depreciating by 1.2 centavos from its P51.37 finish on Monday, based on Bankers Association of the Philippines data.
The peso opened Tuesday’s session slightly stronger at P51.36 versus the dollar. Its weakest showing was at P51.42, while its intraday best was at P51.33 against the greenback.
Dollars exchanged dropped to $560.28 million on Tuesday from $627 million on Monday.
The peso was slightly weaker after hawkish statements from Fed officials, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Reuters on Monday reported that St. Louis Federal Reserve President James Bullard supported calls for a faster pace of Fed interest rate hikes. He said a more aggressive action is more apt amid the four strong inflation reports in a row.
In a separate interview, Richmond Fed President Thomas Barkin said starting to hike rates is timely but its specifics will still be dependent on inflation trajectory in the next months.
Meanwhile, a trader in an e-mail said safe-haven demand made the dollar stronger amid geopolitical concerns due to the Russia-Ukraine conflict.
The US government on Monday ordered its embassy in Kyiv to relocate to the Western part of Ukraine amid the rapid acceleration of Russian forces on the borders.
Mr. Ricafort gave a forecast range of P51.28 to P51.43 per dollar, while the trader expects the local unit to move within P51.30 to P51.55. — LWTN with Reuters