The peso depreciated against the dollar on Tuesday due to hawkish signals from US Federal Reserve Chair Jerome H. Powell at the Jackson Hole Economic Symposium over the weekend.
The local currency closed at PHP 56.75 versus the dollar on Tuesday, weakening by 18 centavos from Friday’s PHP 56.57 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Tuesday’s session at PHP 56.70 per dollar. Its intraday best was at PHP 56.55, while its weakest showing was at PHP 56.81 against the greenback.
Dollars traded went down to USD 1.28 billion on Tuesday from the USD 1.32 billion on Friday.
The peso was dragged down by hawkish signals from Mr. Powell’s speech on Friday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso weakened after Fed Chair Powell hinted at a prolonged period of elevated US policy rates during his speech at the Jackson Hole Symposium,” a trader likewise said in an e-mail.
The Federal Reserve may need to raise interest rates further to cool still-too-high inflation, Mr. Powell said on Friday, promising to move with care at upcoming meetings as he noted both progress made on easing price pressures as well as risks from the surprising strength of the US economy, Reuters reported.
While not as hawkish a message as he delivered this time a year ago at the annual Jackson Hole Economic Policy Symposium, Mr. Powell’s remarks still delivered a punch, with investors now seeing one more rate hike by yearend more likely than not.
The Fed has raised rates by 5.25 percentage points since March 2022, and inflation by the Fed’s preferred gauge has moved down to 3.3% from its peak of 7% last summer. Although the decline was a “welcome development,” Mr. Powell said, inflation “remains too high.”
The Fed will hold its next policy review on Sept. 19-20.
For Wednesday, the trader said the peso could rebound on expectations of a softer US Job Openings and Labor Turnover Survey report overnight, which could signal easing labor market conditions.
The trader expects the peso to move between PHP 56.60 and PHP 56.85 per dollar on Wednesday, while Mr. Ricafort sees it ranging from PHP 56.65 to PHP 56.85. — AMCS with Reuters