THE PESO weakened to a near one-month low against the dollar on Monday ahead of the central bank’s policy review this week.
The local currency closed at PHP 56.07 versus the dollar on Monday, depreciating by 28 centavos from Friday’s PHP 55.79 finish, data from the Bankers Association of the Philippines’ website showed.
This was the peso’s worst finish in nearly a month or since its PHP 56.21-per-dollar close on April 19.
The local unit opened Monday’s session weaker at PHP 55.95 per dollar. Its worst showing for the day was at PHP 56.09, while its intraday best was at PHP 55.90 versus the greenback.
Dollars traded went down to USD 1.28 billion on Monday from the USD 1.488 billion recorded on Friday.
The peso weakened on Monday on signals of a pause in Bangko Sentral ng Pilipinas (BSP) rate hikes at their May 18 meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso weakened to breach the PHP 56 level after BSP Governor Medalla hinted that the central bank might keep local policy rates unchanged in its policy meeting this week,” a trader likewise said in an e-mail.
The central bank is likely to leave its key interest rate unchanged at its policy meeting this week, BSP Governor Felipe M. Medalla said on Monday, possibly hitting the pause button after its most aggressive tightening cycle in two decades, Bloomberg reported.
A pause is the “most likely result” at the May 18 meeting, he said on the sidelines of a forum of the central bank and the International Monetary Fund in Cebu on Monday.
The BSP has raised borrowing costs by 425 basis points (bps) since May 2022 to help bring down elevated inflation, bringing its policy rate to a 16-year high of 6.25%.
A BusinessWorld poll last week showed 13 out of 18 analysts see the Monetary Board pausing its tightening cycle at Thursday’s meeting.
If realized, this would be the first time the BSP will leave interest rates untouched since it began hiking in May 2022.
For Tuesday, the trader said the peso could continue depreciating amid expectations of a potential rebound in US retail sales in April.
The trader sees the peso trading between PHP 55.95 and PHP 56.20 per dollar, while Mr. Ricafort sees it moving from PHP 55.95 to PHP 56.15.
This article originally appeared on bworldonline.com