THE PESO weakened further on Wednesday to hit a four-month low against the dollar due to hawkish comments from US Federal Reserve officials.
The local currency closed at PHP 56.21 versus the dollar on Wednesday, declining by seven centavos from Tuesday’s PHP 56.14 finish, data from the Bankers Association of the Philippines’ website showed.
This was the peso’s worst showing in more than four months or since its PHP 56.22 finish on December 1, 2022.
The local unit opened Wednesday’s session at PHP 56.15 per dollar. It climbed to as high as PHP 55.95 during the day, while its worst showing was at PHP 56.23 versus the greenback.
Dollars traded went down to USD 1.236 billion on Wednesday from the USD 1.418 billion recorded on Tuesday.
The peso weakened as the dollar rose amid hawkish remarks from Fed officials, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The dollar pulled further above last week’s one-year low on Wednesday, as investor focus honed in on what the Fed may have to do to tame inflation, rather than on the recent problems in the US banking sector, Reuters reported.
The dollar index, which gauges the greenback against six major peers, ticked up 0.22% to 101.94 after a choppy few days.
St. Louis Fed chief James Bullard told Reuters in an interview that he leans toward 75 basis points (bps) of additional tightening, versus the market consensus for one more 25-bp hike next month and then the potential for as many as two quarter-point cuts later this year.
By contrast, Atlanta Fed President Raphael Bostic said in an interview with CNBC that he expects just one more quarter-point hike, followed by an extended pause.
The US central bank raised the fed funds rate by 25 bps last month to 4.75%-5%. It has hiked rates by 475 bps since March 2022.
“The peso weakened anew as mixed reports from US-listed company earnings raised concerns on the health of the global economy this year,” a trader said in an e-mail.
For Thursday, the trader said the peso could recover against the dollar on expectations of a strong Eurozone inflation report and weak US initial jobless claims data.
The trader expects the peso to trade between PHP 56.25 and PHP 56.50 a dollar on Thursday, while Mr. Ricafort sees it moving from PHP 56.10 to PHP 56.30. — By A.M.C. Sy with Reuters
This article originally appeared on bworldonline.com