THE PESO declined to a near three-month low against the dollar on Monday as strong US data dampened expectations of an early rate cut by the US Federal Reserve.
The local unit closed at PHP 56.33 per dollar on Monday, weakening by 36 centavos from its PHP 55.97 finish on Friday, data from the Bankers Association of the Philippines showed.
This was the peso’s weakest close in nearly months since its PHP 56.73 finish on Oct. 31, 2023.
The peso opened Monday’s session stronger at PHP 55.95 against the dollar, which was also its intraday best. Its weakest showing was its close of PHP 56.33 versus the greenback.
Dollars traded went up to USD 1.71 billion on Monday from USD 1.39 billion on Friday.
The peso was dragged down by a stronger dollar amid dampened hopes of early policy easing by the Fed, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said via Viber.
“The peso weakened significantly following the upbeat US consumer sentiment report for January and fading views of an early March US rate cut,” a trader said in an e-mail.
The Fed raised borrowing costs by a total of 525 basis points from March 2022 to July 2023 to the 5.25-5.5% range.
It will hold its first policy meeting for the year on Jan. 30-31.
For Tuesday, the trader said the peso could rebound on profit-taking and possible dollar weakness ahead of the Bank of Japan’s policy decision.
The trader sees the peso moving between PHP 56.10 and PHP 56.35 per dollar, while Mr. Ricafort expects it to range from PHP 56.25 to PHP 56.45. — AMCS