The peso weakened slightly against the dollar on Thursday on expectations of a rate hike from the US Federal Reserve next week after increases from other central banks.
The local currency closed at PHP 56.11 versus the dollar on Thursday, inching down by 1.20 centavos from Wednesday’s PHP 56.098 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Thursday’s session at PHP 56.12 per dollar. Its weakest showing was at P56.21, while its intraday best was at PHP 56.08 against the greenback.
Dollars traded rose to USD 957 million on Thursday from the USD 841.55 million seen on Wednesday.
The peso inched down on expectations of further tightening by the Fed next week after the Bank of Canada fired off a surprise hike, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The Bank of Canada on Wednesday hiked its overnight rate to a 22-year high of 4.75%, and markets and analysts immediately forecast yet another increase next month to ratchet down an overheating economy and stubbornly high inflation, Reuters reported.
The central bank had been on hold since January to assess the impact of previous hikes after raising borrowing costs eight times since March 2022 to a 15-year high of 4.50% — the fastest tightening cycle in the bank’s history.
The move suggested that other central banks, including the Fed, may have more work to do to combat inflation.
The Fed will hold its policy meeting on June 13-14.
The US central bank raised borrowing costs by 25 basis points (bps) last month, bringing the Fed funds rate to 5% to 5.25%.
It has hiked borrowing costs by 500 bps since March 2022.
For Friday, Mr. Ricafort sees the peso trading between PHP 56.05 and PHP 56.25 against the dollar. — with Reuters
This article originally appeared on bworldonline.com