Peso down as Evans signals support for 50-bp increases
THE PESO weakened versus the greenback on Wednesday as another US Federal Reserve official said he supports aggressive rate hikes in their coming meetings.
The local unit closed at P52.49 per dollar on Wednesday, depreciating by three centavos from its P52.46 finish on Tuesday.
The peso opened Wednesday’s session at P52.44 against the dollar. Its weakest showing was at P52.49, while its intraday best was at P52.42 versus the greenback.
Dollars exchanged dropped to $895.8 million on Wednesday from $1.087 billion on Tuesday.
A trader in an e-mail said the peso weakened after a dovish-leaning Fed official said he supports a 50-basis-point (bp) rate hike in the US central bank’s coming meetings.
Reuters reported that Chicago Federal Reserve Bank President Charles Evans said on Tuesday he is comfortable with two 50-bp increases in order to reach a neutral policy setting by end-2022.
“We should be looking for clear progress of easing inflationary pressures or else we would need to be much more concerned about how much we will have to do,” Mr. Evans told reporters.
The Federal Open Market Committee will have its next policy review on May 3-4. In March, it raised interest rates by a quarter percentage point for the first time since 2018.
Meanwhile, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said the market continued to price in data showing slower remittance growth in February.
Cash remittances rose by 1.33% to $2.509 billion in February from a year earlier, the central bank reported on Monday. This is the slowest expansion since the 1.7% fall seen in January 2021, reflecting the impact of the resurgence of infection in some host countries that necessitated the need to tighten restrictions.
The market this Thursday will wait for more policy signals from the Fed, Mr. Neri said.
“Speeches of key Federal Reserve officials may also exert upward pressure on Thursday’s trading session if the rhetoric continues to affirm that aggressive rate hikes will be carried out soon to help manage runaway US inflation,” he said in a Viber message.
For Thursday, Mr. Neri expects the local unit to move from P52.38 to P52.65 per dollar, while the trader gave a forecast range of P52.40 to P52.60. — LWTN with Reuters
