Peso falls as stimulus measures by US Fed, ECB hang

AFP FILE PHOTO

MANILA, Philippines—The peso fell on Wednesday as investors realized their initial expectations of another round of stimulus by the US Federal Reserve and the European Central Bank may not yet materialize.

The local currency closed at 41.765 against the US dollar, down by 4.5 centavos from the previous day’s finish of 41.72:$1.

Intraday high hit 41.735:$1, while intraday low settled at 41.80:$1. Volume of trade amounted to $821.47 million from $807.52 million previously.

The decline of the peso and other key Asian currencies came amid a shift in the sentiment of some investors. Traders said that many market players were expecting the US Fed and the ECB to announce their intention to infuse cash (through buying of bonds) into their respective economies to boost growth, but their outlook changed amid the lack of a concrete signal from the two monetary authorities.

Officials of the US Fed are set to meet on Thursday, while those of the ECB are set to meet on Friday, for policy setting.

Traders said fund owners seemed to be too much focused on the potential decisions to be made in the meetings, and the uncertainties caused some risk aversion. Consequently, demand for emerging-market assets, such as peso-denominated securities, fell.

The depreciation of the peso came with the decline in the Philippine Stock Exchange index. The PSEi fell by 8.94 points to 5,298.72 on Wednesday.