MANILA, Philippines—The peso dropped on Thursday, together with a few other Asian currencies, amid a cloudy outlook on the global economy and doubts whether the US Federal Reserve would actually do another stimulus activity.
The local currency closed at 42.47 against the US dollar, down by 22 centavos from the previous day’s finish of 42.25:$1.
Intraday high hit 42.225:$1, while intraday low settled at 42.47:$1. Volume of trade amounted to $1.099 billion from the previous day’s $635.57 million.
There is uncertainty whether the US Fed would actually do another activity meant to pump-prime the sluggish US economy amid discussions on whether such a move would be prudent on a net basis, or whether it could only cause Asian currencies to appreciate further.
Earlier expectations of another round of stimulus, to be done through bond purchases, prompted investors to buy Asian securities, thus leading to appreciation of the currencies in the region. A stimulus measure was hoped to lift the US economy to benefit Asian exporters, like the Philippines.
However, traders say there is a debate on whether such a move could actually help lift the US economy or whether it would simply disrupt exchange rates.
In the meantime, the Bangko Sentral ng Pilipinas has decided to keep interest rates unchanged, leading to expectations the BSP would not longer hike rates throughout the year.
Higher rates could have encouraged more foreign portfolio investors to buy Philippine securities, which could have caused the peso to rise, traders said.