Economy 2 MIN READ

Peso drops as investors await minutes of Fed’s June meeting for policy hints

July 6, 2023By BusinessWorld

The peso fell against the dollar on Wednesday on expectations of hawkish signals from the minutes of the US Federal Reserve’s meeting last month.

The local currency closed at PHP 55.385 versus the dollar on Wednesday, weakening by 15.50 centavos from Tuesday’s PHP 55.23 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Wednesday’s session at PHP 55.30 per dollar. Its weakest showing was at PHP 55.46, while its intraday best was at PHP 55.28 against the greenback.

Dollars traded rose to USD 1.16 billion on Wednesday from the USD 801.82 million seen on Tuesday.

The peso weakened ahead of the release of minutes of the Fed’s June 13-14 meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso weakened amid market expectations of potentially hawkish remarks from the Fed minutes due to be released overnight,” a trader said in a Viber message.

The US dollar drifted near the middle of its range of the past three weeks against major peers on Wednesday, as traders looked ahead to the release of minutes from the Federal Reserve’s latest meeting for clues about the path for monetary policy, Reuters reported.

The dollar index — which measures the currency against a basket of six major peers, including the euro and yen — rose 0.11% to 103.18, after tracking between 103.75 and 102.75 since early June.

Minutes of the Fed’s meeting last month were set to be released overnight.

Markets expect the Fed to hike in its July 25-26 review after pausing last month.

The US central bank left the fed funds rate unchanged at 5-5.25% last month after hiking by a cumulative 500 basis points (bps) for 10 straight meetings, but projections released at that meeting showed policy makers saw two more 25-bp hikes before the end of the year.

For Thursday, the trader said the peso could depreciate further following the release of the Fed minutes.

The trader expects the peso to range from PHP 55.30 to PHP 55.55 per dollar on Thursday, while Mr. Ricafort sees it moving from PHP 55.25 to PHP 55.45. — AMCS with Reuters

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