Peso retreats against the dollar on hawkish comments from Fed officials
THE PESO retreated versus the greenback on Wednesday as US monetary officials signaled their openness to more rate increases this year to normalize their stance.
The local unit ended trading at P51.43 per dollar on Wednesday, shedding 24 centavos from its P51.19 finish on Tuesday, based on Bankers Association of the Philippines data.
The peso opened Wednesday’s session at P51.25 versus the dollar, which was also its intraday best. Its weakest showing was at P51.445 against the greenback.
Dollars exchanged dropped to $1.263 billion on Wednesday from $1.303 billion on Tuesday.
A trader in an e-mail said the peso weakened significantly after hawkish statements from the US Federal Reserve officials.
Reuters reported that Fed Reserve Governor Lael Brainard on Tuesday said she expects monetary policy to be in a more neutral position through rate increases and a rapid balance sheet runoff.
Separately, Fed Bank of Kansas City President Esther George said she is open to a 0.50-basis-point increase in interest rates as part of monetary policy tightening.
The Fed raised rates last month for the first time in three years and released projections that policy rate would end the year at least in the range of 1.75% to 2%, if not higher, which would require quarter-point rate increases at all six remaining Fed meetings this year.
Meanwhile, another trader in a Viber message said the dollar’s broad-based strength was a main driver for foreign exchange trading on Wednesday. The second trader said the peso’s depreciation also tracked losses in the local stock market.
The Philippine Stock Exchange index declined by 46.81 points or 0.65% to close at 7,109.26 on Wednesday. The broader all shares index likewise fell by 16.94 points or 0.44% to end trading at 3,780.49.
For Thursday, the first trader gave a forecast range of P51.35 to P51.60 per dollar, while the second trader sees the peso moving within the P51.20 to P50.50 band. — L.W.T. Noble with Reuters
