The peso weakened against the dollar on Wednesday, March 21, as investors expect the US Federal Reserve (Fed) to hike its interest rates, which is seen to support the greenback.
The local currency ended Wednesday’s trading at P52.15 against the dollar, seven centavos weaker than the P52.08-per-greenback finish on Tuesday.
The peso traded sideways the whole day, opening the session stronger at P52.05 versus the dollar. Its intraday high stood at P52.03, while its worst showing for the day stood at its P52.15-per-dollar close.
Dollars traded slid slightly to $445.6 million yesterday from the $456.2 million logged the previous day.
“The peso depreciated near the close today as investors started to position towards the dollar in anticipation of a likely hawkish rate decision from the Federal Reserve,” a trader said in an e-mail.
The Fed is expected to raise interest rates this year, according to a Reuters report. Market players are also anticipating the Fed to signal more hikes in response to the tax cuts and government spending.
The central bank said late last year that there would be three quarter-of-a-point hikes this year, but some policymakers hinted that there could be more.
Meanwhile, investors are also anticipating should the Bangko Sentral ng Pilipinas (BSP) will also hike its interest rates during the Monetary Board meeting on Thursday, March 22.
In a BusinessWorld poll of 12 economists, seven see the local central bank hold on to its current borrowing rates. — Karl Angelo N. Vidal