Peso weakens anew against dollar

THE PESO weakened anew against the dollar on Thursday amid a stronger dollar in general after the US Federal Reserve raised rates for the first time in a year, and hinted of two to three rate hikes next year.

The local unit closed at its weakest level for the day at P49.96 versus the dollar on Thursday, 23 centavos lower compared to its P49.73 finish in Wednesday’s session.

The peso generally traded weaker after it opened the foreign exchange market at P49.90 against the greenback, while its strongest level for the day was at P49.87 a dollar before closing to its lowest intraday level.

Dollars traded slightly rose to $438.9 million from the $356.9 million recorded the previous day, data from the Philippine Dealing & Exchange Corp. showed.

Traders attributed the dollar’s strength against the peso to negative market sentiments on the Fed’s tone of aggressively tightening borrowing rates further next year.

“The peso depreciated today primarily because of the higherthan-expected path of US interest rate normalization, which pointed to three rate hikes next year against market expectations of just two rate adjustments,” a trader said in an e-mail yesterday.

“The dollar strengthened across the board yesterday after the Fed hinted of around two to three more rate hikes in 2017,” another trader said in a phone interview on Thursday.

As expected, the Fed, during its two- day Federal Open Market Committee meeting, unanimously decided to increase federal funds rate to a range within 0.50%-0.75%, the first tightening move since it moved to raise rates in December 2015, after keeping rates at near-zero levels following the global financial crisis in 2008.