The peso depreciated against the dollar on Monday on expectations that the US Federal Reserve will hold its key rate at its meeting this week.
The local currency closed at PHP 56.866 versus the dollar on Monday, weakening by 5.1 centavos from Friday’s PHP 56.815 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Monday’s session at PHP 56.80 per dollar. Its intraday best was at PHP 56.74, while its weakest showing was at PHP 56.875 against the greenback.
Dollars traded fell to USD 821.1 million on Monday from the USD 1.06 billion on Friday.
The peso weakened due to expectations that the Fed will keep its benchmark rate steady in its meeting this week, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso weakened further amid expectations of hawkish policy cues from the US Federal Reserve in their meeting this week,” a trader likewise said in an e-mail.
A Reuters poll of 97 economists conducted on Sept. 7-12 showed 95%, or 94 economists, predicted the US central bank would hold the federal funds rate at the current 5.25%-5.5% during its Sept. 19-20 meeting.
The Fed raised interest rates by 25 basis points (bps) last month, bringing its benchmark overnight rate to a range between 5.25% and 5.5%.
It has hiked rates by a cumulative 525 bps since it began its tightening cycle in March last year.
The peso was also dragged down by higher global crude oil prices on Monday, Mr. Ricafort added.
Reuters reported Brent crude futures rose 71 cents or 0.8% to USD 94.64 a barrel by 0622 GMT while US West Texas Intermediate crude futures were at USD 91.55 a barrel, up 78 cents or 0.9%.
Both benchmarks have climbed for three consecutive weeks to touch their highest levels since November and are on track for their biggest quarterly increase since Russia’s invasion of Ukraine in the first quarter of 2022.
For Tuesday, the trader said the peso could recover due to a potentially stronger euro zone inflation report.
The trader sees the peso moving between PHP 56.70 and PHP 56.90 per dollar on Tuesday, while Mr. Ricafort expects it to range from PHP 56.75 to PHP 56.95. — Aaron Michael C. Sy
This article originally appeared on bworldonline.com