Peso plunges to near nine-month low

The peso plunged to a near nine-month low against the dollar on Wednesday as market players awaited US inflation data and following the sharp decline in gold prices.

The local unit closed at PHP 58.41 versus the greenback, sinking by 18.5 centavos from its PHP 58.225 finish on Tuesday, Bankers Association of the Philippines data showed.

This was its worst finish in nearly nine months or since it closed at PHP 58.66 per dollar on Feb. 3.

The peso opened Wednesday’s session weaker at PHP 58.30 versus the dollar. Its intraday best was at PHP 58.28, while its worst showing was at PHP 58.43 against the greenback.

Dollars exchanged went down to USD 1.29 billion on Wednesday from USD 1.43 billion on Tuesday.

“The dollar-peso closed higher on cautious trading ahead of the release of US inflation data,” a trader said in a phone interview.

A US government shutdown, which began on Oct. 1, has halted key economic data releases, leaving investors without crucial indicators. That places Friday’s consumer price report, a pivotal inflation gauge, firmly in the spotlight ahead of the US Federal Reserve’s policy meeting on Oct. 28-29, Reuters reported.

While September’s core inflation is expected to hold steady at 3.1%, markets widely expect a quarter-point rate cut this month, with another reduction likely in December.

The dollar was also generally stronger early on Wednesday following the sharp decline in gold prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The US dollar was flat against a basket of currencies on Wednesday, pausing after a three-day rise. After sharp falls, gold prices eased to steady at USD 4,119.80 per ounce after their biggest one-day plunge in five years the previous session.

The US dollar was last 0.1% weaker at 151.85 yen.

The dollar index, which measures the greenback’s strength against a basket of six currencies, was last trading at 99.01, little changed on the day after three consecutive days of gains. President Donald J. Trump on Tuesday rebuffed a request by top Democratic lawmakers to meet until the three-week-old US government shutdown ends.

Expectations that the shutdown will end soon are dwindling, according to the prediction market site Polymarket, which is pricing a 40% implied probability that the US government will remain closed until Nov. 16 or later.

For Thursday, the trader sees the peso moving between PHP 58.20 and PHP 58.50 per dollar, while Mr. Ricafort said it could range from PHP 58.30 to PHP 58.55. — A.M.C. Sy with Reuters