Peso might weaken forward of US information

THE PESO may decline further this week ahead of the release of US consumer inflation data, which could support more rate hikes. — BW FILE PHOTO

THE PESO may weaken further and hit the P59-a-dollar level anew this week ahead of the release of September US consumer inflation data, which could fan expectations of another aggressive hike from the US Federal Reserve.

The local unit closed at P58.92 per dollar on Friday, losing 26.7 centavos from its P58.653 finish on Thursday, based on Bankers Association of the Philippines data.

This is just eight centavos stronger than the local unit’s record low of P59 per dollar set on Oct. 3.

Week on week, the peso also weakened by 29.5 centavos from its P58.625 close on Sept. 30.

The peso opened Friday’s session at P58.85 per dollar. Its weakest showing was at P58.93, while its intraday best was at P58.825 versus the greenback.

Dollars exchanged dropped to $483.34 million on Friday from $756.05 million on Thursday.

The peso depreciated after hawkish signals from Fed officials last week, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

US central bank policy makers, in separate engagements last week, said they will support continued interest rate hikes as inflation in the world’s largest economy remains stubborn. The Fed has raised rates by 300 basis points so far since March.

Another major driver for the peso last week was the Bank of England’s announcement of a bond-buying plan that helped calm down global markets, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

For this week, Mr. Asuncion said the dollar may strengthen as investors price in a bigger rate hike as they anticipate the Fed’s minutes this week and US inflation data. 

Investors will also be on the lookout for the release of the minutes of the Fed’s most recent meeting on Thursday.

For this week, both Mr. Ricafort and Mr. Asuncion gave a forecast range of P58.50 to P59 per dollar. — Keisha B. Ta-asan

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