Peso descends to another 10-year low of 50.28:$1
INQUIRER.net FILE PHOTO
MANILA — An increased likelihood that US monetary authorities will hike interest rates this month weakened the peso on Wednesday, shedding seven centavos to close at a fresh over 10-year low of 50.28:$1.
At the Philippine Dealing System, the peso reached an intraday low of 50.32:$1 and a high of 50.235:$1. It opened at 50.32:$1, weaker than Tuesday’s close of 50.21:$1.
Wednesday’s close remained the weakest since Sept. 26, 2006’s 50.32:$1.
The total volume traded rose to $429.8 million from Tuesday’s $389.8 million.
“Currency markets of not only the peso but also of other Asian currencies are reflecting the higher likelihood of a US Fed rate hike at its mid-March meeting. US interest rate overnight were higher to reflect hawkish statements from key and voting members of the Federal Open Market Committee (FOMC). The chances of a Fed rate hike this month has increased to more than 50 percent from last week’s 40 percent,” ING Bank Manila senior economist Joey Cuyegkeng said.
Minutes of the policy-setting Federal Open Market Committee (FOMC) released last week indicated a rate hike “fairly soon.”
Last December, the FOMC unanimously voted to raise the key federal funds rate to a range of 0.5-0.75 percent, only the second time that US interest rates were increased during the last 10 years following a similar move in December 2015.
US Fed officials expect three more hikes this year to bring up the rate to 1.4 percent by end-2017, as US President Donald J. Trump’s promises to jack up infrastructure spending while slashing taxes are seen to grow inflation faster.
As for Trump’s first speech before the US Congress Wednesday morning Manila time, Cuyegkeng said markets deemed it as “lacking details about government deficit spending and tax reform.”
“The reiteration of such intentions and objectives still resonated among investors but not as much as the higher likelihood of further tightening of monetary policy by mid-March,” Cuyegkeng said. SFM
