The peso inched down against the dollar on Monday amid renewed geopolitical concerns and market caution ahead of the Bangko Sentral ng Pilipinas’ (BSP) policy meeting.
The local unit closed at PHP 57.316 per dollar on Monday, dropping by 3.6 centavos from its PHP 57.28 finish on Friday, Bankers Association of the Philippines data showed.
The peso opened Monday’s session slightly weaker at PHP 57.299 against the dollar. Its worst showing was at PHP 57.42, while its intraday best was at PHP 57.25 versus the greenback.
Dollars exchanged went down to USD 1.18 billion on Monday from USD 1.5 billion on Friday.
The peso weakened against the dollar as sentiment soured amid escalating tensions in the Middle East and amid a lack of catalysts, a trader said by phone.
US Defense Secretary Lloyd Austin has ordered the deployment of a guided missile submarine to the Middle East, the Pentagon said on Sunday, as the region braces for possible attacks by Iran and its allies after the killing of senior members of Hamas and Hezbollah, Reuters reported.
While the USS Georgia, a nuclear-powered submarine, was already in the Mediterranean Sea in July, according to a US military post on social media, it was a rare move to publicly announce the deployment of a submarine.
In a statement after Austin spoke with his Israeli counterpart, the Pentagon said Austin had ordered the Abraham Lincoln strike group to accelerate its deployment to the region.
“Secretary Austin reiterated the United States’ commitment to take every possible step to defend Israel and noted the strengthening of US military force posture and capabilities throughout the Middle East in light of escalating regional tensions,” the statement added.
The US military had already said it will deploy additional fighter jets and Navy warships to the Middle East as Washington seeks to bolster Israeli defenses.
“The peso weakened due to market caution ahead of the BSP policy meeting this week,” a second trader said in an e-mail.
A BusinessWorld poll conducted last week showed that nine out of 16 analysts surveyed expect the Monetary Board to deliver a 25-basis-point (bp) rate cut at Thursday’s review.
This would bring the target reverse repurchase rate to 6.25% and would be the first reduction in benchmark borrowing costs since November 2020, or during the coronavirus pandemic.
The Monetary Board has kept its policy rate at an over 17-year high of 6.5% since October 2023 following cumulative hikes worth 450 bps.
BSP Governor Eli M. Remolona said last week that the Monetary Board is now “a little bit less likely” to cut rates at its Aug. 15 policy meeting following the worse-than-expected July inflation print.
Headline inflation accelerated to a nine-month high of 4.4% in July from 3.7% in June, slower than the 4.7% print in the same month a year ago and within the BSP’s 4%-4.8% forecast.
For Tuesday, the first trader sees the peso moving between PHP 57.10 and PHP 57.50 a dollar as the market awaits the BSP’s policy meeting.
The second trader sees the peso ranging from PHP 57.20 to PHP 57.45 ahead of the release of key US inflation reports. — AMCS with Reuters
This article originally appeared on bworldonline.com