THE PESO dropped against the dollar for the fourth straight session on Thursday after minutes of the US Federal Reserve’s latest meeting showed they plan to continue raising borrowing costs to fight inflation.
The local unit closed at P52.40 per dollar, losing 4.5 centavos from its P52.355 finish on Wednesday, based on Bankers Association of the Philippines data.
The peso opened Thursday’s session at P52.35 versus the dollar. Its weakest showing was at P52.49, while its intraday best was at P52.28 against the greenback.
Dollars exchanged increased to $986.01 million on Thursday from $804.2 million on Wednesday.
The peso weakened after minutes of the Fed’s policy meeting earlier this month released overnight showed the central bank’s hawkish stance, a trader said in a Viber message.
“Still hawkish but less hawkish versus market estimates on the possibility of going beyond the neural level of Fed rates,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
All participants of the Fed’s May 3-4 policy meeting backed a half-percentage-point rate increase to combat inflation that they agreed had become a key threat to the economy’s performance and was at risk of racing higher without action by the central bank, Reuters reported.
This month’s 50-basis-point hike in the Fed’s benchmark overnight interest rate was the first of that size in more than 20 years and “most participants” judged that further hikes of that magnitude would “likely be appropriate” at the Fed’s policy meetings in June and July, according to the minutes.
Mr. Ricafort added that the peso weakened due to increasing global oil prices.
Oil prices rose on Wednesday, buoyed by tight supplies.
Brent crude futures for July settled up 47 cents at $114.03 a barrel, while US West Texas Intermediate crude for July delivery ended up 56 cents to $110.33 a barrel.
For Friday, the trader said the peso may rebound against the dollar ahead of the second revision of the US gross domestic product data.
Mr. Ricafort expects the peso to move around P52.35 to P52.50 per dollar on Friday while the trader sees the peso trading between P52.30 and P52.50. — K.B. Ta-asan with Reuters