The peso slumped to its weakest level in over 16 years ahead of the Bangko Sentral ng Pilipinas policy meeting and largely due to the hawkish remarks of the Federal Reserve.
The peso declined to 54.47 against the US dollar on Wednesday, its weakest since Nov. 21, 2005 when it closed at 54.74. It fell to as low as 54.635.
Volume likewise declined to $1.348 billion from Tuesday’s $1.389 billion.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricarfort, in a reply to questions from the Philippine News Agency, said the local currency depreciated “despite the latest declines in global crude oil prices to new one-month lows on concerns over risk of possible US recession amid more aggressive Fed rate hikes/monetary policy tightening.”
Ricafort said another driver for the currency trading in the local market during the day included the expectations for at least another 25 basis points increase in the BSP’s key rates during the rate-setting meeting of the central bank’s policy-making Monetary Board on Thursday.
This, after BSP Governor Benjamin Diokno earlier hinted it could jack up the central bank’s key policy rates to help stave off inflation.
He said continued recovery of the domestic economy gives monetary authorities the leeway to increase key rates. (PNA)