PESO fell against the dollar on Monday as US central bank officials said they plan to raise rates to curb rising inflation.
The local commodities closed at P52.27 per dollar on Monday, declining 24 centavos from Wednesday’s close of P52.03, according to data from the Philippine Bankers Association.
Local financial markets were closed from 14-15 April in honor of Maundy Thursday and Good Friday.
On Monday the peso opened at P52.15 per dollar. Its weakest form was at P52.29, while its intraday high was at P52.15 versus the US dollar.
Dollar exchanges fell from $1.195 billion on Wednesday to $1.142 billion on Monday.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message that the peso weakened on continued hawkish signals from Fed officials.
Cleveland Fed President Loretta Mester on Thursday said the central bank would raise interest rates fast enough to contain inflation without causing the economy to fall into recession or derailing a strong job market, Reuters reported.
“Our intention is to reduce accommodation at the rate necessary to better balance demand and limited supply to control inflation, while expanding economic activity and maintaining a healthy labor market,” Mester said.
The Fed raised interest rates by a quarter of a point last month to curb soaring inflation.
Meanwhile, one email trader said the market was also driven by the rapid rise in US producer inflation, which could be the basis for tightening monetary policy.
The US Department of Labor data released last week showed that the producer price index for final demand rose 1.4% in March, the biggest increase since the government overhauled the series in December 2009.
On Tuesday, Mr. Ricafort and traders offered a forecast range of P52.15 to P52.35. — LWT Noble with Reuters
