The peso weakened further against the US dollar Wednesday, falling to its lowest level in almost three months as the likelihood of another interest rate hike by the US Federal Reserve increases.
The peso lost P0.19 to close at 50.29 Wednesday from 50.10 Tuesday. It was the local currency’s weakest level since it settled at 50.325 on March 24, 2017. Total volume turnover reached $727 million, lower than $1.155 billion Tuesday.
“We still have three more Fed speakers for the rest of the week, and I think the US dollar will remain supported at these current levels,” Security Bank Corp. said in its daily market report.
The peso breached the 50-a-dollar level this week, dragged down by the hawkish statement of New York Fed president William Dudley that the US central bank might continue to gradually tighten its monetary policy.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the peso’s weakness was a reaction to external developments particularly the hawkish statements of Fed officials.
“So all regional currencies have responded the same way. We are just moving with other regional currencies,” Tetangco said. He, however, said that Bangko Sentral’s policy was not to go against the fundamental trend and minimize the sharp fluctuation and volatility.
Reports quoted Dudley, a close ally of Fed Chair Janet Yellen, as saying that US inflation was a bit low but should rise alongside wages as the labor market continues to improve, allowing the Federal Reserve to continue gradually tightening US monetary policy.
The peso closed at 49.72 to a dollar on the last trading day of 2016. It posted its weakest level in 10 years at 50.40 per greenback on March 3, 2017.
The Cabinet-level Development Budget Coordination Committee kept the peso-dollar exchange rate this year at 48 to 50 a dollar.
DBCC’s forecast for the years 2018 to 2022 was adjusted to 48 to 51 per dollar, on the resumption of the US Federal Reserve’s monetary policy tightening that could put more pressure on the peso.