PHILIPPINE STAR/WALTER BOLLOZOS

THE PESO sank against the dollar on Wednesday on expectations of faster US consumer and producer inflation last month, which could affect the US Federal Reserve’s policy decision next week.

The local unit closed at P58.28 per dollar on Wednesday, weakening by 27 centavos from its P58.01 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened the session at P58.15 against the dollar. It traded weaker than Tuesday’s close the entire session, with its intraday best at just P58.13 while its worst showing was at P58.30 versus the greenback.

Dollars exchanged jumped to $1.81 billion on Wednesday from $1.17 billion on Tuesday.

The peso declined “on the back of a stronger dollar ahead of the release of US inflation data,” a trader said by phone.

The November US consumer price index (CPI) and producer price index (PPI) likely picked up from the previous month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.

US CPI data were set to be released overnight, while the PPI report is due to come out on Thursday.

The dollar traded close to a two-week high versus the yen on Wednesday ahead of a highly anticipated reading of US inflation that could provide clues on the pace of Fed interest rate cuts, Reuters reported.

The dollar eased 0.12% to 151.80 yen as of 0045 GMT, but remained close to the overnight peak of 152.18 yen, its strongest level since Nov. 27.

The dollar index, which measures the currency against the yen and five other major peers, was steady at 106.36, after rising to a one-week high of 106.63 in the previous session.

Traders currently assign 85% odds to a quarter-point rate cut by the Fed on Dec. 18.

Economists expect both headline and core consumer prices to have risen 0.3% in November, from previous increases of 0.2% and 0.3%, respectively.

The peso was also dragged by a weaker yuan after officials said they were considering letting the Chinese currency weaken next year in preparation for the tariffs to be imposed by US President-elect Donald J. Trump, the trader said.

China’s top leaders and policy makers are considering allowing the yuan to weaken in 2025 as they brace for higher US trade tariffs in a second Trump presidency, Reuters reported.

The contemplated move reflects China’s recognition that it needs bigger economic stimulus to combat Mr. Trump’s threat of bigger tariffs, people with knowledge of the matter said.

Mr. Trump has said he plans to impose a 10% universal import tariff, and a 60% tariff on Chinese imports into the United States.

Letting the yuan depreciate could make Chinese exports cheaper, thus blunting the impact of tariffs, and creating looser monetary settings in mainland China.

For Thursday, the trader sees the peso moving between P58.10 and P58.50 per dollar, while Mr. Ricafort expects the local unit to range from P58.15 to P58.35. — A.M.C. Sy with Reuters

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