THE PESO weakened further on Tuesday, moving closer to the P58 level, amid broad dollar strength due to cautious signals from US Federal Reserve officials and as markets await further details on China’s stimulus plans.
The local unit closed at P57.865 per dollar on Tuesday, declining by 39.5 centavos from its P57.47 finish on Monday, Bankers Association of the Philippines data showed.
This was the peso’s weakest close in over two months or since it finished at P57.90 per dollar on Aug. 5.
The peso opened Tuesday’s session slightly stronger at P57.455 against the dollar. Its intraday best was at P57.43, while it dropped to as low as P57.92 versus the greenback during the session.
Dollars exchanged rose to $1.47 billion on Tuesday from $780.38 million on Monday.
The peso declined as cautious signals from Fed officials caused the dollar to strengthen, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.
The peso fell due to negative market sentiment after China refused to disclose the overall size of its stimulus package, a trader said by phone.
For Wednesday, the trader said the peso could consolidate ahead of the policy decision of the Bangko Sentral ng Pilipinas.
The trader sees the peso moving between P57 and P58 per dollar, while Mr. Ricafort expects it to range from P57.75 to P57.96.
The US dollar was perched near its highest in more than two months against major currencies on Tuesday, spurred by wagers the Federal Reserve will proceed with modest rate cuts in the near term, Reuters reported.
The dollar index, which measures the US currency against six rivals, was at 103.19, just shy of 103.36, the highest level since Aug. 8 it touched on Monday.
US Federal Reserve official Christopher Waller on Monday called for “more caution” on interest-rate cuts, while Fed Minneapolis President Neel Kashkari said he also envisages more modest reductions.
Meanwhile, China’s finance ministry on Saturday said it would increase borrowing, without saying when or by how much. — A.M.C. Sy with Reuters