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THE PESO retreated versus the greenback on Thursday following hawkish signals from a key US central bank official. 

The local unit closed at P51 per dollar on Thursday, shedding 13.5 centavos from its P50.865 finish on Wednesday, based on data from the Bankers Association of the Philippines. 

The peso also closed at P51 per dollar on Monday and Tuesday, its weakest point in more than a year or since it ended at P51.07 on March 26, 2020. 

The local unit opened Thursday’s session stronger at P50.85 per dollar. Its weakest showing was its closing level, while its intraday best was at P50.79 versus the greenback. 

Dollars exchanged inched down to $1.104 billion on Thursday from $1.106 billion on Wednesday. 

The peso weakened due to concerns on the US Federal Reserve’s plan to cut its asset purchases following recent statements from a key official, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said. 

Reuters reported that Philadelphia Fed Bank President Patrick T. Harker said it will soon be time to trim the bond purchases that have supported the markets at the onset of the pandemic. 

“I am in the camp that believes it will soon be time to begin slowly and methodically — frankly, boringly — tapering our $120 billion in monthly purchases of Treasury bills and mortgage-backed securities,” Mr. Harker said in a virtual event on Wednesday. 

Mr. Harker also said that the Fed could look into raising interest rates starting late 2022 or early 2023, depending on the economy’s situation. 

Meanwhile, a trader said the contraction in China’s manufacturing activity also affected peso-dollar trading. 

Data from China’s National Bureau of Statistics showed the official manufacturing Purchasing Manager’s Index (PMI) was at 49.6 in September versus 50.1 in August. This marked the first time since February 2020 that the reading fell below the 50-mark which separates expansion from contraction. 

The decline in factory activity was attributed to wider curbs on electricity use and elevated input prices. 

For Friday, Mr. Ricafort gave a forecast range of P50.85 to P51.05 per dollar, while the trader expects the local unit to move within P50.80 to P51.10. — L.W.T. Noble with Reuters