The peso on Wednesday broke the 55-per-dollar boundary on the possibility of more aggressive rate hikes by the US Federal Reserve that buoyed the greenback against other currencies.
The peso lost P0.29 to close at 55.06 from 54.77 per dollar on Tuesday. It was the local unit’s weakest level in more than 16.5 years since 55.08 on Oct. 27, 2005. Total volume traded stood at $1.277 billion, down from $1.653 billion in the previous day.
“The latest currency movements came after the US dollar corrected higher vs. major global currencies after continued hawkish signals from some Fed officials [New York Fed President John Williams and San Francisco Fed President Mary Daly]… ,” Rizal Commercial Banking Corp. chief economist Michael Ricafort told Manila Standard in an emailed message.
Ricafort added the latest peso exchange rate movements were “partly due to the healthy downward correction in the PSEi today, after rising for three straight trading days, considered a healthy correction, by -42.22 points or -0.7 percent to close at 6,303.19, still among 1-week highs, in line with the healthy downward correction in the US stock markets from 2-week highs after the net gains/relief rally since late last week.”
The peso has been retreating for days against the greenback since the aggressive 0.75-basis point hike in the policy rate by the US Federal Reserve in middle of June, the biggest rate increase since 1994.
Economists earlier said the Fed’s move would lead to a stronger US dollar against global currencies.
The inter-agency Development Budget Coordination Committee in its latest macroeconomic assumptions projected the peso-dollar exchange rate to range from 51 to 53 this year. The peso-dollar rate assumption was pegged at 50-53 from 2023 to 2025.
The peso closed 2021 at 50.999 against the US dollar, significantly weaker than 48.023 on the last trading day of 2020.
