The peso tumbled to a new all-time low of 57 to a dollar Tuesday, as the greenback gained more strength from the possibility of more rate hikes by the US Federal Reserve.
The peso closed at 57 flat, slightly weaker than 56.99 on Monday. Total volume turnover reached $812.19 million, down from $976.45 million a day earlier.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the peso closed weaker for the fourth straight day.
“The peso exchange rate [was] relatively steady/little changed near the record 57.00 after slightly lower than expected inflation rate at 6.3 percent in August 2022 as well as the latest rollback in local fuel pump prices,” Ricafort said.
Government data on Tuesday showed that inflation in August eased to 6.3 percent from 6.4 percent in July, pulled down by slower increases in the prices of fuel and food and nonalcoholic beverages.
The rate brought the average inflation in the first eight months to 4.9 percent, above the target range of 2 percent to 4 percent.
Ricafort said the peso depreciated against the greenback by a total of P6.001 or 11.8 percent from 50.999 at end-2021.
Ricafort earlier cited 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 got an additional boost after the release of stronger-than-expected US non-farm jobs data that could support further Fed rate hikes.
He also said the peso weakened after the release of latest data showing that the government’s outstanding debt hit a record P12.89 trillion as of end-July 2022.
Bangko Sentral ng Pilipinas Governor Felipe Medalla said last Friday the movement of the exchange rate was due mainly to a “stronger dollar.”
Medalla said the peso was the “third least depreciated currency” in the region after the BSP hiked the local policy interest rates by 175 basis points this year.
Medalla said it was hard to give guidance on the movement of the foreign exchange amid uncertainties on what the US Federal Reserve would do next in its succeeding meeting.
The Bangko Sentral surprised the market on July 14 when it made an off-cycle increase in the benchmark policy interest rate by 75 basis points to 3.25 percent to rein in inflation and support the peso against the US dollar.
It also raised for the fourth time this year the benchmark interest rates by 50 basis points to 3.75 percent on Aug. 18.