Home Top News Peso sinks to new 20-month low as hawkish Fed bolsters dollar

Peso sinks to new 20-month low as hawkish Fed bolsters dollar

by
0 comment
BW FILE PHOTO

THE PESO sank to a new 20-month low on Wednesday as the dollar strengthened following hawkish comments from US Federal Reserve officials.

The local unit closed at P58.86 per dollar on Wednesday, weakening by nine centavos from its P58.77 finish on Tuesday, Bankers Association of the Philippines data showed.

This was the peso’s worst finish since its P58.87-a-dollar close on Oct. 24, 2022.

Year to date, the peso is now down by P3.49 from its end-2023 finish of P55.37 against the greenback.

The peso opened Wednesday’s session weaker at P58.82 per dollar. Its worst showing was at P58.88, while its intraday best was at P58.77 versus the greenback.

Dollars traded went down to $720.25 million on Wednesday from $814.1 million on Tuesday.

“The peso weakened against the dollar because of hawkish comments from the Fed,” a trader said by phone.

The dollar was stronger on Wednesday despite mixed US data, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The US dollar rose on Tuesday, bolstered by hawkish comments from Federal Reserve officials as well as data showing a stable housing market in the world’s largest economy, both suggesting that the central bank will not be in a rush to kickstart its rate-cutting cycle, Reuters reported.

Against a basket of currencies, the dollar index was up 0.1% at 105.72.

The greenback firmed against the euro, yen, Swiss franc, and commodity currencies, such as the Australian and New Zealand dollars.

Fed Governor Michelle Bowman started the ball rolling for the dollar, repeating her view on Tuesday that holding the policy rate steady “for some time” will likely be enough to bring inflation under control. She also reiterated her willingness to raise borrowing costs if needed.

Fed Governor Lisa Cook, for her part, said it would be appropriate to cut interest rates “at some point” given significant progress on inflation and a gradual cooling of the labor market. She remained vague, however, about the timing of the easing.

US data was mixed on Tuesday, still allowing the dollar to hold its gains.

A report showed US single-family home prices increased at a steady pace in April, rising 0.2% on the month after being unchanged in March. In the 12 months through April house prices increased 6.3% after advancing 6.7% in March. That pushed the dollar a little higher.

US consumer confidence, however, slightly eased in June, with the index at 100.4 from a downwardly revised 101.3 in May, according to the Conference Board. The June number, however, was marginally higher than the market forecast of 100. The report didn’t really hurt the dollar.

Investors are now looking to Friday’s release of the US personal consumption expenditures price index — the Fed’s preferred measure of inflation.

For Thursday, the trader said the key driver would be the Bangko Sentral ng Pilipinas’ policy review.

The trader sees the peso ranging from P58.60 to P58.90 per dollar on Thursday, while Mr. Ricafort expects it to move between P58.70 and P58.90. — AMCSwith Reuters

Related Posts

Leave a Comment