THE PESO fell to an over one-month low against the dollar on Wednesday as latest US consumer inflation data supported worries over further rate increases by the Federal Reserve.
The local currency closed at P55.17 versus the greenback on Wednesday, declining by 34 centavos from Tuesday’s P54.83 finish, Bankers Association of the Philippines data showed.
This was the peso’s worst finish in more than a month or since it closed at P55.29 per dollar on Jan. 12.
The peso opened Tuesday’s trading session weaker at P54.95 per dollar, which was already its intraday best. Its worst showing was at P55.23 against the greenback.
Dollars traded rose to $1.072 billion on Wednesday from $848.27 million on Tuesday.
“The peso depreciated significantly amid increasing views of more US policy rate hikes this year after the stronger-than-expected US consumer report overnight,” a trader said in an e-mail.
The peso weakened as the dollar index appreciated slightly after the release of the US consumer price index (CPI) report, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
US consumer prices accelerated in January as Americans continued to be burdened by higher costs for rental housing and food, suggesting that the Federal Reserve was far from pausing its interest rate hiking campaign, Reuters reported.
The US consumer price index increased 0.5% last month after gaining 0.1% in December.
In the 12 months through January, the CPI increased 6.4%. That was the smallest gain since October 2021 and followed a 6.5% rise in December.
The Fed has raised its policy rate by 450 basis points since March 2022 from near zero to a 4.5%-4.75% range.
Its next policy review is on March 21-22.
The dollar touched a six-week high of 133.30 Japanese yen overnight and hovered at 133.05 yen on Wednesday. It had a bumpier ride against other currencies following the CPI data, but seems to be pausing following a January slide.
The dollar index against other major currencies was steady at 103.4.
For Thursday, the trader said the peso could recover on profit taking.
The trader sees the peso moving from P55 to P55.25 per dollar, while Mr. Ricafort expects it to trade between P55.05 and P55.25. — A.M.C. Sy with Reuters
This article originally appeared on bworldonline.com