THE PESO hit a one-month low against the dollar on Monday on expectations that the US Federal Reserve will remain hawkish, and amid global inflation concerns.
The local unit closed at P56.21 per dollar on Monday, weakening by 28 centavos from its P55.93 finish on Friday, based on data from the Bankers Association of the Philippines.
This is the first time the peso closed at the P56-per-dollar level since late July and is its worst finish since July 22’s P56.28.
The peso opened Monday’s session weaker than its Friday close at P56.10 versus the dollar. Its worst showing was at P56.22, while its intraday best was at P56.03 against the greenback.
Dollars exchanged decreased to $804.95 million on Monday from $889.67 million on Friday.
“The peso exchange rate weakened… as the hawkish Fed signals amid the need to fight elevated US inflation supported the upward correction in the US dollar versus major global currencies,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Fed Chair Jerome H. Powell will lead a host of policy makers at the annual Atlanta Fed’s Jackson Hole Economic Symposium on Friday, with the US central bank facing the fastest inflation since 1980 and raising interest rates fast to counter it.
“The peso weakened after the hotter-than-expected German producer inflation report renewed global inflationary concerns,” a trader said in an e-mail.
German producer prices jumped at the fastest pace in July, pushing investors to buy safe-haven dollars. According to the federal statistics office on Friday, producer prices in Germany surged 37.2% year on year, the biggest rise since records began in 1949. The month-on-month rise of 5.3% was also a record high.
The record increases in producer prices were primarily driven by skyrocketing energy prices, up by 105% from the same month last year.
For Tuesday, the trader said “the local currency might rebound from potential profit taking and weaker US manufacturing and services reports overnight.”
The trader expects the local unit to move from P56.05 to P56.25, while Mr. Ricafort gave a wider forecast range of P56.05 to P56.30 per dollar. — KBT