Peso drops anew ahead of Fed decision

THE PESO weakened anew against the dollar yesterday as market players preferred to stay on the sidelines ahead of the US Federal Reserve’s policy decision.

The peso ended at P49.82 versus the greenback on Wednesday, five centavos weaker than its P49.77- a- dollar finish on Tuesday.

The local unit opened the session at its peak for the day of P49.70, while its worst intraday level was at P49.835-to-a-dollar.

Dollars traded on Wednesday slipped to $386.2 million from the $408 million that changed hands the previous session.

“The peso depreciated today due to bargain hunting ahead of the US interest rate decision [today]. Mixed data from China did little to influence the exchange rate,” a trader said on Wednesday.

The Fed was scheduled to release its policy statement earlier today following its Jan. 31-Feb. 1 meeting.

Another trader said by phone: “Dollars have fallen quite a bit in the past couple of weeks so its sharp fall was also overdone.”

“Seems like the market was done so the peso followed suit and market players were just looking to buy dollars,” the trader added.

The trader also mentioned that despite the dollar’s strength towards the end of yesterday’s session, the greenback opened the foreign exchange market a bit lower on the back of US President Donald J. Trump’s protectionist policy decisions regarding immigrants entering the US.

For today, one trader said the peso may fall within P49.70P49.90 against the dollar while the other trader said that it will remain within the P49.60-a-dollar range in the near term.

“There might be sideways movement due to likely mixed assessments from the Federal Reserve and conflicting signals from US reports on manufacturing and employment,” one trader noted.

Meanwhile, the South Korean won hit a two-and-a-half month high and some other Asian currencies held firm, after comments from Mr. Trump and his trade adviser raised fears that the United States may be shifting away from a “strong dollar” policy. Mr. Trump’s trade adviser Peter Navarro criticized Germany, Japan and China on Tuesday, saying the three key US trading partners were engaged in devaluing their currencies to US disadvantage.

Asian currencies edged higher after the dollar fell broadly on Tuesday in the wake of the comments. “This suggests that perhaps there might be a shift in terms of the strong dollar policy,” said Khoon Goh, head of Asia research for ANZ.