THE PESO weakened further versus the dollar on Thursday after the US Federal Reserve hiked rates by 75 basis points (bps) for a second straight meeting, as expected.
The local unit closed at P55.82 against the dollar on Thursday, down by 14 centavos from P55.68 on Wednesday, data from the Bankers Association of the Philippines’ website showed.
The peso opened the session at P55.58 against the dollar. Its weakest showing was at P55.97, while its intraday best was at P55.55 versus the greenback.
Dollars exchanged went up to $1.27 billion on Thursday from $1.01 billion on Wednesday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso dropped after the Fed’s widely expected 75-bp hike and “as Fed Chair Jerome H. Powell signaled that the US economy is not in recession, the pace of Fed rate hikes would slow at some point.”
Mr. Ricafort said the peso’s decline versus the dollar was a healthy correction after its recent surge.
“Market sentiment also supported by the latest gains in the local stock market, as well as lower global crude oil price lingering among three-month lows recently,” he added.
“The FOMC (Federal Open Market Committee) doubled down on aggressive policy tightening by raising the benchmark Fed funds rate by 75 bps yet again last night as largely expected,” Mitsubishi UFJ Group Global Markets Research analyst Sophia Ng said.
The Fed on Wednesday raised its policy rate by 75 bps for a second straight meeting, bringing total interest hikes since March to 225 bps.
After the meeting, Mr. Powell said while the labor market remains strong, other economic indicators have softened. He also hinted at an eventual slowdown in hikes.
Philippine shares rose following the Fed’s latest move. The Philippine Stock Exchange index went up by 142.50 points or 2.28% to close at 6,379.26 on Thursday, while the broader all shares index increased by 54.38 points or 1.61% to 3,424.96.
For Friday, Mr. Ricafort sees the peso moving within P55.60 to P55.90 against the dollar, while Ms. Ng expects it to remain below P56. — DGCR