Peso slumps to near three-month low

THE PESO declined to a near three-month low against the dollar on Monday as strong US data dampened expectations of an early rate cut by the US Federal Reserve.

The local unit closed at P56.33 per dollar on Monday, weakening by 36 centavos from its P55.97 finish on Friday, data from the Bankers Association of the Philippines showed.

This was the peso’s weakest close nearly months or since its P56.73 finish on Oct. 31, 2023.

The peso opened Monday’s session stronger at P55.95 against the dollar, which was also its intraday best. Its weakest showing was its close of P56.33 versus the greenback.

Dollars traded went up to $1.71 billion on Monday from $1.39 billion on Friday.

The peso was dragged down by a stronger dollar amid dampened hopes of early policy easing by the Fed, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said via Viber.

“The peso weakened significantly following the upbeat US consumer sentiment report for January and fading views of an early March US rate cut,” a trader said in an e-mail.

The Fed raised borrowing costs by a total of 525 basis points from March 2022 to July 2023 to the 5.25-5.5% range.

It will hold its first policy meeting for the year on Jan. 30-31.

For Tuesday, the trader said the peso could rebound on profit taking and possible dollar weakness ahead of the Bank of Japan’s policy decision.

The trader sees the peso moving between P56.10 and P56.35 per dollar, while Mr. Ricafort expects it to range from P56.25 to P56.45. — AMCS