Peso hits new 7-year low on Yellen’s remarks

The Philippine peso dipped to a new seven-year low against the greenback on Thursday, pulled down by remarks from US Federal Reserve Chairperson Janet Yellen on increasing banking regulations, GMA News reported.

The local currency closed at P48.330:$1, down 8 centavos from 48.250 on Wednesday.

The foreign exchange settled at its weakest in seven years since September 15, 2009, when it closed at P48.335:$1.

At the Philippine Dealing System, the peso reached an intraday low of 48.350 and a high of 48.150 after opening at 48.190.

"The peso was initially stronger as the dollar pulled back in reaction to the OPEC (Organization of the Petroleum Exporting Countries) decision to curb output in November," Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands, said in an email.

“The local unit failed to hold on to gains as investors remained wary over the timing of the Fed rate hike as Yellen delivered relatively hawkish comments overnight," Mapa added.

According to a report by Reuters, Yellen said the US central bank is "now considering making several changes to our stress testing methodology and process" as she testified at a House of Representatives Financial Services Committee hearing on Wednesday.

Budget Secretary Benjamin Diokno earlier attributed the peso's weakness to investors' concerns of the impending increase in interest rates in the US.

Last week, the US Fed left interest rates unchanged but strongly signaled it could still tighten monetary policy by the end of this year.

The Department of Finance earlier argued that a weaker peso will actually help improve the competitiveness of the country's exports and the value of dollar remittances.