THE PESO weakened versus the dollar yesterday, with the sideways move ending a two-day rally amid market cautiousness ahead of the results of a monetary policy meeting in the United States.

The local unit closed at P50.985, seven centavos down from Tuesday’s P50.915 finish.

The peso opened slightly weaker at P50.93 against the greenback but tested the P50.80 level as its best showing that day. However, the currency lost its steam during the rest of the session, with the closing rate also standing as its intraday low.

Two traders interviewed yesterday attributed the peso’s downward move to a wait-and-see stance taken by market players as they anticipate statements from the US Federal Reserve, as the monetary authority ends its rate-setting meeting today.

“The exchange rate again moved sideways today ahead of the monetary policy meeting of the Fed. The peso depreciated a bit likely because of expectations of some hawkish signals from the Fed, even as the Fed might not yet raise interest rates again in September 2017,” one trader said on Wednesday.

Market players are also awaiting the timetable for the Fed’s planned unwinding of its $4.5-trillion bond portfolio, which is seen as a prelude to a fresh tightening move.

A second trader said investors likely squared their positions ahead of the conclusion of the Fed meeting, which in turn contributed to the downward move of the peso.

Dollars traded yesterday reached $655 million, below the $740.2 million that exchanged hands on Tuesday.

Back home, the Bangko Sentral ng Pilipinas (BSP) said regular clearing, settlement, cash servicing, and treasury operations will proceed today despite Malacañang’s decision to suspend work in government offices and among public schools in observance of the 45th anniversary of martial law as declared by former President and dictator Ferdinand E. Marcos.

The BSP will also proceed with its monetary policy meeting today right after the Fed’s review. Economists widely expect the local central bank to keep rates steady.

For today, the first trader sees the peso moving between P50.85 to P51.15, with expectations that the currency could depreciate further should the Fed give some signals that a fresh rate hike remains on the table for the remaining months of 2017.

Meanwhile, the second trader expects the peso to trade within the P50.90-P51.10 range. — Melissa Luz T. Lopez