Peso weakens to P56-a-dollar level on market caution before Fed statement

Peso weakens to P56-a-dollar level on market caution before Fed statement

THE PESO declined to the P56-per-dollar level anew on Wednesday as the market stayed on the sidelines ahead of the US Federal Reserve’s policy decision announcement overnight.

The local unit closed at P56.13 per dollar on Wednesday, weakening by 21 centavos from its P55.92 finish on Tuesday, Bankers Association of the Philippines data showed.

This was the peso’s weakest close since its P56.20-a-dollar finish on Feb. 29.

The peso opened Wednesday’s session at P55.87 against the dollar, which was also its intraday best. Its weakest showing was at P56.20 versus the greenback.

Dollars exchanged rose to $1.54 billion on Wednesday from $1.31 billion on Tuesday.

“The peso depreciated to breach the P56 level due to market caution ahead of the Fed meeting overnight,” a trader said in an e-mail.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the market was waiting for the updated Fed dot plot and statements from the US central bank chief on their future policy path.

The US central bank was set to end a two-day policy meeting overnight. Markets widely expect the Fed to keep its target rate steady at the 5.25-5.5% range for a fifth straight review.

Mr. Ricafort added that the peso weakened amid high global oil prices recently.

Oil prices retreated from multi-month highs on Wednesday due to a strong dollar, Reuters reported. Brent eased 0.2% to $87.18 a barrel, while US crude lost 0.3% to $83.21 per barrel.

Meanwhile, the dollar index, which measures the US currency against six rivals, was 0.039% higher at 103.90.

For Thursday, the trader said the peso could weaken further due to possible hawkish statements from Fed Chair Jerome H. Powell.

The trader sees the peso moving between P56 and P56.25 per dollar on Thursday, while Mr. Ricafort expects it to range from P56 to P56.20. — A.M.C. Sy with Reuters