Peso hits near one-month low
THE PESO declined to a near one-month low against the dollar on Tuesday with the US Federal Reserve set to start a two-day policy meeting overnight, where it could provide more hints on the timing of their planned rate cuts.
The local unit closed at P58.645 per dollar on Tuesday, weakening by 13.4 centavos from its P58.511 finish on Monday, Bankers Association of the Philippines data showed.
This was the peso’s worst close in almost a month or since its P58.725-a-dollar finish on July 3.
The peso opened Tuesday’s session weaker at P58.60 against the dollar. It traded lower than its Monday close the entire session, as its intraday best was at just P58.58, while its worst showing was at P58.695.
Dollars exchanged rose to $1.23 billion on Tuesday from $924.41 million on Monday.
The peso weakened against the dollar as the market awaits the Fed’s policy review, a trader said by phone.
“The Fed is widely expected to hold interest rates unchanged, but the forward guidance of Fed Chair Jerome H. Powell will be watched as it could affect the local central bank’s next policy setting,” the trader said.
The US central bank will hold its policy meeting on July 30-31. It has kept its target rate at the 5.25%-5.5% range since July 2023.
Meanwhile, the Bangko Sentral ng Pilipinas will hold its own review on Aug. 15, where it is anticipated to announce its first rate cut in over three years.
The peso dropped amid the seasonal increase in remittances ahead of the new school year, higher importation before the fourth quarter and ahead of the start of the ghost month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.
The ghost month is a period in the Lunar calendar when some Asian investors refrain from making big investments or decisions, resulting in lower trading volumes in financial markets.
For this year, the period is scheduled to start on Aug. 4 and end on Sept. 2.
For Wednesday, the trader sees the peso moving between P58.30 and P58.80 per dollar, while Mr. Ricafort expects the peso to range from P58.55 to P58.75. — A.M.C. Sy