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Friday, March 29, 2024

Peso falls to 57 vs. dollar before closing at 56.99

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The peso fell to a new all-time low against the US dollar Monday on the possibility of more US Federal Reserve interest rate hikes.

PESO STILL FALLING. A man counts dollar bills at a local money changer as the peso fell to a new all-time low against the US dollar Monday, on the possibility of more US Federal Reserve interest rate hikes. The peso touched the P57 to $1 level at one point before closing at P56.99 against the greenback—down from 56.77 on Friday. Contributing to the peso depreciation were the “hawkish signals from some US Fed officials in an effort to bring down elevated US inflation from among 40-year highs recently.” Norman Cruz

The local currency touched the 57 level at one point before closing at 56.99 against the greenback, down from 56.77 on Friday. Total volume turnover reached $976.45 million Monday, up from $936.95 million Friday.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said contributing to the peso depreciation were the “hawkish signals from some Fed officials, especially since the Fed’s yearly Jackson Hole Symposium more than a week ago, that signaled higher Fed rates for longer in an effort to bring down elevated US inflation from among 40-year highs recently.”

Ricafort said the greenback received an additional boost after the release of stronger-than-expected US non-farm jobs data that could support any further Fed rate hikes.

He also said the peso weakened after the Philippine government released data showing that outstanding debt hit a new record high of P12.89 trillion as of end-July.

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Bangko Sentral ng Pilipinas Governor Felipe Medalla said last Friday that the movement in the exchange rate was due mainly to a “stronger dollar.”

“The peso is [actually] one of the least depreciated currencies… There is no peso problem, but a dollar problem,” Medalla said.

Medalla, citing latest available data, said the peso was only the “third least depreciated currency” in the region, after the BSP hiked the local policy interest rates by 75 basis points and 50 bps in the middle of this year.

When asked to give any new exchange rate outlook, Medalla said it was hard to give guidance “when you are having a hard time looking forward.”

He said there were some uncertainties on what the US Federal Reserve would do next in its succeeding meeting. “Things are just so fluid… ,” he said.

Ricafort predicted that the next resistance level for the peso would be 57 against the US dollar.

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