Peso drops vs dollar

The peso depreciated to a near two-month low against the dollar on Monday amid signals from a US Federal Reserve official that they may cut rates later than expected.

The local unit closed at PHP 56.39 per dollar on Monday, weakening by 12 centavos from its PHP 56.27 finish on Friday, Bankers Association of the Philippines data showed.

This was the peso’s weakest finish in almost two months or since its PHP 56.401 per dollar finish on Jan. 30.

The peso opened Monday’s session at weaker PHP 56.37 against the dollar. Its worst showing was at PHP 56.40, while its intraday best was at PHP 56.24 versus the greenback.

Dollars exchanged dropped to USD 1.65 billion on Monday from $2.1 billion on Friday.

The peso was dragged down by the dollar strengthening to new highs and increasing global crude prices amid signals from Fed officials that the US central bank could cut rates later than expected, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Atlanta Federal Reserve bank President Raphael Bostic said on Friday he now expects just a single quarter-point interest rate cut this year versus two cuts that he had projected previously, a change in his outlook driven by persistent inflation and stronger-than-anticipated economic data, Reuters reported.

“I’m definitely less confident than I was in December” that inflation will continue to fall towards the Fed’s 2% target, Mr. Bostic said in comments to reporters.

“The peso weakened anew amid expectations of a potentially strong US retail sales report,” a trader said in an e-mail.

For Tuesday, the trader said the peso could rebound against the dollar amid increased liquidity before the long weekend.

The trader sees the peso moving between PHP 56.25 and PHP 56.50 per dollar on Tuesday, while Mr. Ricafort expects it to range from PHP 56.25 to PHP 56.45. — A.M.C. Sy with Reuters