Peso weakens as market eyes BSP meeting

The peso weakened against the dollar on Monday as players took positions before the Philippine central bank’s policy meeting this week, where the market expects a third straight rate hike.

The currency dropped by six centavos to close at PHP 61.73 versus the greenback from PHP 61.67 on Thursday, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Monday’s session weaker at PHP 61.75 per dollar. It dropped to as low as PHP 61.79, while its intraday high was at PHP 61.688 against the greenback.

Dollars exchanged thinned to USD 970.2 million from USD 2.115 billion previously.

The peso dropped after trading mostly sideways against the dollar as the market awaits the Bangko Sentral ng Pilipinas’ (BSP) policy decision on Thursday, a trader said in a phone interview.

A BusinessWorld poll showed that 19 of 24 analysts expect the Monetary Board to raise the target reverse repurchase by 25 basis points (bps) for a third straight meeting this week as inflation stays elevated.

The Monetary Board has raised benchmark rates by a cumulative 50 bps since April, bringing the policy rate to 4.75%.

BSP Governor Eli M. Remolona, Jr. has said that they are ready to adjust their monetary policy stance as necessary to bring inflation back to their target amid broadening price risks, especially with the Middle East conflict still unresolved. However, weak Philippine economic growth somehow eases the pressure on the central bank to take aggressive action.

The peso went down as players waited for news on the new sanctions to be announced by the United States against Iran, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Tuesday, the trader sees the peso ranging from PHP 61.60 to PHP 62 against the dollar, while Mr. Ricafort expects it to move between PHP 61.60 and PHP 61.80. — Aaron Michael C. Sy