By Melissa Luz T. Lopez,
Senior Reporter

THE PESO could depreciate versus the dollar this week amid renewed bets of a monetary policy hike in the United States, with market players anticipating clearer hints from scheduled speeches of members of the Federal Reserve.

The local unit surged on Friday as it closed at P50.725 against the greenback, up by 35.5 centavos from the P51.08 finish logged the previous day. It is also the peso’s strongest showing since a P50.575 rate on Aug. 9.

Week-on-week, the peso picked up 44 centavos from the P51.165-per-dollar exchange rate logged on Sept. 15.

The dollar buckled on Friday amid a fresh string of geopolitical unrest between North Korea and the United States, with Kim Jong Un saying they are considering fresh attacks in response to Donald J. Trump’s scathing words before the United Nations General Assembly earlier this week.

Traders interviewed on Friday said developments in the offshore markets will be the main focus this week, which could allow the greenback to regain its strength against a host of currencies including the peso.

“The dollar might recover this week, as investors might divert their attention back to the possibility another US interest rate hike this year amid easing concerns over North Korea and likely upbeat US data on durable goods orders and second-quarter economic growth,” said Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines.

Set to be released this week are key economic data on US durable goods orders as well as the third revision for second-quarter gross domestic product, which could provide some clues as to whether the US economy is indeed ripening up to accommodate a third wave of rate normalization.

“Fed speeches and global events will affect the intra-day move of the peso,” a currency trader said separately, although noting that the peso could still “improve” versus the dollar.

A number of Fed policy makers are lined up to make separate speeches this week, starting with New York Fed president William Dudley and Fed chair Janet L. Yellen on Tuesday.

The trader attributed last week’s surge to a weaker dollar due to geopolitical tensions, which came as the peso received a boost from fresh market optimism as the tax reform bill moved closer to being passed by the Senate.

For today, Mr. Dumalagan said the peso could move within the P50.65-P51.05 range, adding that renewed bets for policy tightening in the US could affect the exchange rate in favor of the greenback.

Meanwhile, the trader said the peso could try to break P50.675 if it were to appreciate or test the P50.80 level as it moves weaker versus the dollar.