Peso slips to 12-year low

Cebu Daily News - - ENTERPRISE - /INQUIRER.NET

The peso fell to its weak­est level in 12 years on Wed­nes­day as traders di­gested dovish state­ments of Bangko Sen­tral ng Pilip­inas of­fi­cials that made fi­nan­cial mar­kets un­cer­tain about an­other in­ter­est rate hike next week to help cap lo­cal con­sumer prices.

At the same time, in­vestors also un­loaded pe­sos and shifted to the dol­lar ahead of the out­come of a US Fed­eral Re­serve meet­ing where mar­kets ex­pect the world’s most in­flu­en­tial cen­tral bank to raise its own in­ter­est rates for the sec­ond time this year.

The peso opened the June 13 trad­ing ses­sion weaker at P53 to a dol­lar, from the pre­vi­ous trad­ing ses­sion’s close of P52.887.

It dropped to as low as P53.26 in after­noon trad­ing be­fore clos­ing the ses­sion at P53.23. This was its weak­est since June 29, 2006, when the cur­rency hit P53.55 to a dol­lar.

To­tal vol­ume was heavy with $773.17 mil­lion chang­ing hands, com­pared to last Mon­day’s vol­ume of $653.1 mil­lion.

BDO Uni­bank Chief Strate­gist Jonas Rave­las said the peso’s weak­ness was due to the “prospects of a rate hike in the US this week” as well as the weaker trade data re­leased by the govern­ment last week.

Higher i nter­est rates in the US make dol­lar-de­nom­i­nated in­vest­ments more at­trac­tive to fund man­agers com­pared to peso-de­nom­i­nated se­cu­ri­ties.

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