Peso weakens as ADB cuts PHL growth forecast
THE PESO depreciated against the dollar on Wednesday after the Asian Development Bank (ADB) cut its economic growth forecast for the Philippines this year.
The local currency closed at P56.81 versus the dollar on Wednesday, weakening by 5.50 centavos from Tuesday’s P56.755 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Wednesday’s session at P56.70 per dollar, which was also its intraday best. Its weakest showing was at P56.824 against the greenback.
Dollars traded went down to $835.5 million on Wednesday from $1.17 billion on Tuesday.
The peso declined on Wednesday as the ADB slashed its growth forecast for the country, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
In its latest Asian Development Outlook report, the ADB trimmed its Philippine gross domestic product (GDP) growth forecast for this year to 5.7% from the 6% estimate it gave in April.
This is below the government’s 6-7% growth target.
The peso also depreciated due to a stronger dollar and global crude oil prices recently, Mr. Ricafort said.
“The peso depreciated due to some market caution ahead of the Federal Reserve policy decision overnight,” a trader added in an e-mail.
The Fed was set to announce its latest policy decision overnight after a two-day meeting.
The US central bank raised borrowing costs by 25 basis points (bps) in July, bringing its target rate to a range between 5.25% and 5.5%.
It has hiked rates by a cumulative 525 bps since it began its tightening cycle in March last year.
For Thursday, the trader said the peso could weaken further as the market will stay on the sidelines ahead of the Bangko Sentral ng Pilipinas’ own policy decision.
Both the trader and Mr. Ricafort see the peso ranging from P56.70 to P56.90 per dollar on Thursday. — AMCS
