Peso slips on Fed rate hike bets
THE PESO weakened against the dollar on Thursday following more hawkish statements from the US Federal Reserve chairman.
The local unit ended Thursday’s session at P53.53 versus the greenback, four centavos weaker than the P53.49-per-dollar finish on Wednesday.
The peso immediately strengthened as it opened the session at P53.475 per dollar. It slipped to a low of P53.54, while its intraday high stood at P53.47 versus the greenback.
Dollars traded declined to $334.7 million from the $423.55 million that switched hands the previous day.
A trader said on Thursday that the peso declined due to more hawkish remarks from Fed Chairman Jerome Powell regarding the US economy after he affirmed expectations of at least two more interest rate hikes this year.
In the second day of his testimony before the Senate Banking Committee, Mr. Powell reiterated that the US is on course for years of steady growth supported by strong job market and steady inflation, Reuters reported.
He also downplayed risks of the US’ escalating trade spat with China on the world’s largest economy.
Despite this, the dollar held firm against its peers on Thursday as the dollar index stood little changed at 95.021 against a basket of currencies.
“The peso weakened due to continuation of hawkish remarks regarding the US economy from US Federal Reserve chairman Jerome Powell... despite the stronger inflation readings from the Eurozone,” the trader said in an e-mail.
“The peso traded fairly quiet [on Thursday]. It traded within a super tight range,” a second trader said. “We did not see any volatility. No drivers.”
Meanwhile, Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said: “This decline might have been caused by the BoP ( balance of payments) deficit reported by BSP…”
The country’s BoP position widened to a $1.177 billion deficit in June, double the $ 583- million gap posted in May and the $569-million deficit a year ago
For Friday, the first trader expects the peso to move between P53.40 and P53.60, while the other gave a slimmer range of P53.45-P53.55.