The peso weakened against the dollar on Wednesday, Feb. 28, following the bullish testimony of US Federal Reserve (Fed) Chair Jerome H. Powell.

The local currency closed at P52.10 versus the greenback on Wednesday, seven centavos weaker from its P52.03 finish on Tuesday.

The peso opened the trading session weaker at P52.15 per dollar, while its intraday low stood at P52.18. Its best showing, meanwhile, was at P51.99 against the US currency.

Dollars traded inched upwards to $652.1 million from the $648.7 million that switched hands in the previous session.

A trader interviewed on the phone on Feb. 28 said the peso weakened in the morning session after Mr. Powell testified before the US Congress on late Tuesday (Manila time).

“The peso dipped strongly today amid hawkish remarks [Feb. 28] by Federal Reserve chair Jerome Powell in his testimony to US Congress signaling three or four Fed rate hikes for the year,” the trader told BusinessWorld on Wednesday.

In his Capitol Hill testimony, Fed Chair Powell indicated that the US economy is growing, emphasizing the accelerating wage growth and the robust labor market.
“After easing substantially during 2017, financial conditions in the United States have reversed some of that easing.At this point, we do not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation. Indeed, the economic outlook remains strong,” Mr. Powell said.
He then hinted that the Fed would stick to its current path of gradual rate hikes, spooking the market, Reuters reported.
“With the expectation that US rates are definitely rising after Powell’s speech, I expected a weakening of the peso versus the greenback,” Ruben Carlo O. Asuncion, chief economist of Union Bank of the Philippines said in a text message. — Karl Angelo N. Vidal