Peso sinks to P57 level

by
PHILIPPINE STAR/WALTER BOLLOZOS

THE PESO sank back to the P57 level on Wednesday as markets expect the US Federal Reserve to deliver smaller rate cuts for the rest of the year and due to safe-haven demand for the dollar amid the ongoing conflict in the Middle East.

The local unit closed at P57.02 per dollar on Wednesday, dropping by 11.5 centavos from its P56.905 finish on Tuesday, Bankers Association of the Philippines data showed.

This was the peso’s worst close in close to two months or since its P57.245 finish on Aug. 16.

The peso opened Wednesday’s session slightly stronger at P56.888 against the dollar. Its intraday best was at P56.87, while its weakest showing was at P57.06 versus the greenback.

Dollars exchanged went down to $1.58 billion on Wednesday from $1.897 billion on Tuesday.

“The local currency closed above the P57 level anew from the combined effect of dollar safe-haven demand emanating from the escalating tensions in the Middle East [and] growing market expectations of a softer US rate cut of 25 basis points (bps) in November,” a trader said in an e-mail.

The dollar was generally stronger against Asian currencies on Wednesday amid cautious signals from Fed officials, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.

Trading at the foreign exchange market was cautious on Wednesday as the market awaited the release of minutes of the Fed’s September meeting and September US consumer price index data, a second trader said by phone.

For Thursday, the first trader sees the peso ranging from P56.85 to P57.10 per dollar, while the second trader expects it to move between P56.70 and P57.10.

For his part, Mr. Ricafort said the local unit could trade from P56.90 to P57.10.

The US dollar nudged up against most currencies and hit a new two month high on a basket of peers, Reuters reported.

With markets turning less certain on Fed cuts while still pricing in easing elsewhere, the dollar index touched 102.7, its highest since Aug. 16. It was last up 0.17% at 102.64.

Investors now have about an 85% chance of a quarter-basis-point reduction priced in, reflecting a slim probability the Fed will leave rates unchanged, the CME FedWatch tool showed. — Aaron Michael C. Sy with Reuters

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