February 9, 2023

Filipino Guardian

Sentinels of Filipino Free Press

Peso weakens on hawkish Fed comments


The PESO fell against the dollar on Monday on hawkish signals from a US Federal Reserve official that dampened hopes for smaller rate hikes after US inflation slowed in October.

The local unit closed at P57.28 on Monday, down five centavos from its close of P57.23 on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session at P57.30 against the dollar. Its low for the day was P57.39 against the greenback, while the peso’s high for the day was P57.22.

Dollars traded fell to $720.63 million on Monday from $820.15 million on Friday.

“The peso depreciated after Fed official Waller dismissed market views of a shift in US central bank policy following the better-than-expected US consumer inflation report,” a trader said in an email.

Fed Governor Christopher J. Waller said Sunday the Federal Reserve may consider slowing the pace of rate hikes at its next meeting but needs more signs of improving inflation.

US inflation fell to 7.7% in October from 8.2% in September. Month-on-month, the CPI rose 0.4% after rising by the same range in September.

The Fed has hiked rates by 375 basis points (bps) since March.

Even as the peso depreciated slightly on Monday, its close was still one of its lowest in nearly two months, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

“Global crude oil prices are still stuck at nine-month lows and have recently provided some support to sentiment in the peso and other local financial markets,” he added.

Brent crude futures were down 32 cents, or 0.3%, at $95.67 a barrel by 0725 GMT after rising 1.1% on Friday, while US West Texas Intermediate crude futures were down 39 cents or Plunging 0.4% to $88.57 a barrel after closing 2.9% higher on Friday.

Mr. Ricafort said the stock market’s gains also boosted sentiment.

The Philippine Stock Exchange benchmark index gained 67.99 points, or 1.08%, to close at 6,354.76 on Monday, while the broader all-shares index rose 23.70 points, or 0.71%, to 3,352.59 rose.

The trader said the peso could rise Tuesday on potentially weaker US producer inflation.

The trader gave a forecast range of Ps57.20 to Ps57.40 per dollar, while Mr. Ricafort said the peso could rise to Ps57.35 from Ps57.15 on Tuesday. — KBT