MANILA, Philippines – The Philippine peso hit a new 10-year low against the US dollar amid concerns about an anticipated interest rate hike by the US Federal Reserve this month.
The peso ended trading on Friday, March 3, at an intraday low of P50.4 to $1 from the previous day's P50.31.
This is the lowest peso level against the dollar since September 12, 2006.
The peso opened weaker at P50.34 and recovered to an intraday high of P50.315 before ending at P50.4 to $1.
Volume increased to $482.1 million from $409 million on Thursday.
“The US dollar strengthened against major rivals as a March Fed rate hike continues to loom. Market consensus still leans heavily toward a hike,” BPI Asset Management and Trust Corporration, a unit of Bank of the Philippine Islands (BPI), said in its morning view.
The next rate-setting meeting of the US Federal Open Market Committee (FOMC) is on March 14 and 15.
Pauline May Ann Revillas, research analyst at the Metropolitan Bank & Trust Company (Metrobank), said the peso would remain under pressure throughout the year, citing the still volatile financial markets due to the rate hike in the US, and Brexit.
“The uncertainties surrounding the Fed rate hikes, Trump’s economic and fiscal policies, and Brexit negotiations are the main factors that influence the depreciation trend of emerging market currencies like the Philippine peso against the US dollar,” Revillas said.
She said the Duterte administration's plan to ramp up infrastructure spending may add to the pressure on the peso due to higher demand for US dollars to finance imports, but the country's strong macroeconomic fundamentals would help cushion this.
“The Philippines’ solid macroeconomic fundamentals, even amid the still uncertain macroeconomic backdrop, will mitigate a sharp peso depreciation,” Revillas said. – Rappler.com