THE PESO depreciated versus the greenback on Monday as a US central bank official said they plan to raise rates fast to tame rising inflation.
The local unit finished at P52.27 per dollar on Monday, shedding 24 centavos from its P52.03 close on Wednesday, based on bankers Association of the Philippines data.
Local financial markets were closed on April 14-15 in observance of Maundy Thursday and Good Friday.
The peso opened at P52.15 per dollar on Monday. Its weakest showing was at P52.29, while its intraday best was at P52.15 against the greenback.
Dollars exchanged dropped to $1.142 billion on Monday from $1.195 billion on Wednesday.
The peso weakened due to continued hawkish signals from a Fed official, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Reuters reported that Cleveland Federal Reserve Bank President Loretta Mester on Thursday said the central bank will eye to raise interest rates fast enough to tame inflation without pushing the economy into recession or derailing the strong jobs market.
“Our intent is to reduce accommodation at the pace necessary to bring demand into better balance with constrained supply in order to get inflation under control while sustaining the expansion in economic activity and healthy labor markets,” Ms. Mester said.
The Fed increased interest rates by a quarter percentage point last month to tame surging inflation.
Meanwhile, a trader in an email said the faster increase in US producer inflation was also factored by the market, as this could strengthen the case for monetary policy tightening.
US Labor Department data released last week showed the producer price index for final demand rose 1.4% in March, its largest gain since the government revamped the series in December 2009.
For Tuesday, both Mr. Ricafort and the trader gave a forecast range of P52.15 to P52.35. — L.W.T. Noble with Reuters
