Peso moves sideways on hawkish Fed, profit taking after hitting record low

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THE PESO moved sideways on Wednesday on profit taking after it hit its record low of P59 intraday amid hawkish signals from a US Federal Reserve official.

The local unit closed at P58.94 per dollar on Thursday, inching up by 0.5 centavo from its P58.945 finish on Wednesday, based on Bankers Association of the Philippines data.

The peso opened Thursday’s trading session at P58.92 per dollar, which was also its intraday best. Its weakest showing was its current record low of P59 against the greenback.

Dollars exchanged rose to $707.45 million on Thursday from $654 million on Wednesday.

“The peso closed slightly stronger due to profit taking after hitting the 59-peso level intraday following hawkish remarks by Fed official Bullard,” a trader said in an e-mail.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the dollar was propped up against major global currencies by St. Louis Fed President James Bullard’s comments.

Mr. Bullard said he expects the “frontloading” of rate hikes to be done by early 2023 and shift to keeping policy restrictive with small adjustments as inflation cools.

The trader said the peso may weaken anew on Friday “as more Fed officials are expected to reiterate the US central bank’s plan to raise policy rates further.”

The trader expects the peso to trade between P58.90 and P59 per dollar on Friday, while Mr. Ricafort gave a forecast range of P58.80 to P59 versus the greenback. — KBT