Peso drops vs dollar on hawkish Fed signals

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THE PESO weakened versus the greenback on Monday following hawkish signals from another official of the US Federal Reserve.

The local unit closed at P55.825 per dollar on Monday, down by 21.5 centavos from its P55.61 finish on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session at P55.72 versus the dollar, which was also its intraday best. Meanwhile, its weakest showing was at P55.90 against the greenback.

Dollars exchanged decreased to $896.6 million on Monday from $1.01 billion on Friday.

The peso depreciated on Thursday due to hawkish signals from a Fed official, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Richmond Federal Reserve Bank President Thomas I. Barkin on Friday said he will support more interest rate hikes to bring inflation under control.

Mr. Barkin added that they will watch US economic data to decide how big a rate hike should be at the Fed’s next meeting in September.

The Fed has increased its key rate by 225 basis points so far since March.

Still, stronger remittances data in June was positive for the peso, Mr. Ricafort said.

Data released by the central bank on Monday showed cash remittances sent through banks reached $2.75 billion in June, up 4.4% from $2.63 billion in the same month in 2021.

For the first half, cash remittances increased by 2.9% to $15.3 billion from $14.9 billion. The central bank expects remittances to grow by 4% this year.

For Tuesday, Mr. Ricafort gave a forecast range of P55.70 to P55.90 per dollar. — KBT