THE PESO depreciated against the dollar on Monday on expectations of delayed policy easing by the US Federal Reserve.

The local unit closed at P56.095 per dollar on Monday, weakening by 19.5 centavos from its P55.90 finish on Friday, Bankers Association of the Philippines data showed.

The peso opened Monday’s session weaker at P55.94 against the dollar. Its worst showing was its close of P56.095, while its intraday best was at P55.93 versus the greenback.

Dollars exchanged went down to $982.3 million on Monday from $1.25 billion on Friday.

The peso was dragged lower by market expectations of delayed rate cuts by the US central bank, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The combination of strong growth and inflation not yet slowing to the Fed’s 2% target has led Fed officials to push back on rate cut expectations, Reuters reported.

Fed funds futures show a 52.3% chance of a cut in June, with a 34.7% probability of no cut, a sharp reversal from bets on Feb. 1 of a 62% chance of a cut in March, according to CME Group’s FedWatch Tool.

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

For Tuesday, a trader said in an e-mail that the peso could rebound on expectations of a downbeat US durable goods report.

The trader sees the peso moving between P55.95 and P56.20 per dollar on Tuesday, while Mr. Ricafort sees it ranging from P55.95 to P56.15. — AMCS with Reuters