THE PESO depreciated against the dollar on Monday amid hawkish signals from the US Federal Reserve and expectations that the Bangko Sentral ng Pilipinas (BSP) will keep its key rate steady at its meeting on Thursday.

The local unit closed at P56.06 per dollar on Monday, weakening by 10 centavos from its P55.96 finish on Friday, based on Bankers Association of the Philippines data.

The peso opened Monday’s session at P55.94 against the dollar, which was also its intraday best. Its weakest showing was at P56.13 versus the greenback.

Dollars exchanged went up to $1.18 billion on Monday from $951.7 million on Friday.

The peso depreciated against the dollar on Monday due to hawkish signals from Fed Chair Jerome H. Powell late last week, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message.

He added that Mr. Powell’s comments resulted in a generally stronger US dollar against other global currencies.

The Fed kept its benchmark interest rate steady at the 5.25%-5.5% range for a second straight time during its Oct. 31-Nov. 1 meeting.

It has hiked rates by a cumulative 525 basis points (bps) since it began its tightening cycle in March last year.

The US central bank will next meet on Dec. 12-13 to review policy.

“The peso weakened amid expectations that the BSP will maintain its policy rates this week,” a trader added in an e-mail.

A BusinessWorld poll of 18 analysts held last week showed that 15 analysts expect the Monetary Board to maintain the target reverse repurchase (RRP) rate at 6.5%, the highest in 16 years.

Meanwhile, the three remaining economists said the Monetary Board might hike policy rates by 25 bps to 6.75% at the Nov. 16 meeting.

The Monetary Board implemented an off-cycle 25-bp rate hike on Oct. 26, ahead of its scheduled meeting.

Since May 2022, it has raised interest rates by a cumulative 450 bps.

For Tuesday, the trader said the peso could strengthen due to a likely softer US consumer inflation report.

The trader sees the peso moving between P55.90 and P56.15 per dollar on Tuesday, while Mr. Ricafort sees it ranging from P55.95 to P56.15. — Aaron Michael C. Sy