Peso weakens further on Fed chief’s remarks

The peso depreciated further against the dollar on Wednesday after US Federal Reserve Chair Jerome H. Powell said rates may need to remain elevated.

The local unit closed at PHP 57.18 per dollar on Wednesday, weakening by 18 centavos from its PHP 57 finish on Tuesday, Bankers Association of the Philippines data showed.

This was the peso’s worst finish since its PHP 57.375-per-dollar close on Nov. 22, 2022.

The peso opened Wednesday’s session weaker at PHP 57.10 against the dollar, which was already its intraday best. Its worst showing was at PHP 57.333 versus the greenback.

Dollars exchanged jumped to USD 1.92 billion on Wednesday from USD 1.1 billion on Tuesday.

“The peso weakened anew after Fed Chair Powell affirmed prior hawkish policy guidance by other Fed officials,” a trader said in an e-mail.

The dollar remained strong on Wednesday due to Mr. Powell’s comments, as well as escalating tensions in the Middle East, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar edged down but was still within striking distance of its 5-1/2-month high on Wednesday, keeping the yen rooted near 34-year lows after Federal Reserve officials reiterated interest rates are likely to stay higher for longer, Reuters reported.

Top US central bank officials, including Mr. Powell, backed away on Tuesday from providing any guidance on when interest rates may be cut, saying instead that monetary policy needs to be restrictive for longer.

Against a basket of currencies, the dollar was last at 106.22, just shy of the five-month peak of 106.51 touched on Tuesday. The index is up 4.8% for the year.

For Thursday, the trader said the peso could rise on profit-taking.

The trader sees the peso moving between PHP 57 and PHP 57.30 per dollar on Thursday, while Mr. Ricafort expects it to range from PHP 57.05 to PHP 57.25. — A.M.C. Sy with Reuters