The peso fell for a third day to hit a new six-year low on Tuesday, as the expected Federal Reserve rate increase in December continued to drive investors out of emerging markets toward the safety of the greenback.
The peso lost P0.10, or 0.2 percent, to close at 47.26 against the dollar Tuesday, from 47.16 on Monday. Total volume reached $768.6 million, higher than $720 million traded a day earlier.
Tuesday’s rate was the local currency’s weakest level since settling at 47.27 against the dollar on Oct. 27, 2009.
“We will see this strong dollar trend from now until December, or until any weak US data or comments from the Fed will send the currency pair back lower,” Nicholas Antonio Mapa, research officer of the Bank of the Philippine Islands, said in an e-mailed statement.
Mapa, however, discounted the possibility of the peso touching the 48-a-dollar level before the end of the year “Possibly just up to 47.40 or 47.50, but a blowup to 48 may not happen,” Mapa said.
Meanwhile, the government partially awarded P9.732 billion worth of re-issued five-year Treasury bonds during Tuesday’s auction, amid weak investors’ demand and higher rates.
Rates for the Treasury bonds averaged 3.80 percent, or 44.8 basis points higher than the previous rate of 3.352 percent recorded for similar debt instruments on Aug. 18.
“Clearly this is the market direction already as we approach the upcoming Fed meeting,” National Treasurer Roberto Tan said after the auction.
Tenders for the programmed P25-billion offer was undersubscribed at P21.717 billion. The re-issued Treasury bonds have four years and 10 months of remaining life and will mature on August 20, 2020.
“We awarded partially so that there will be gradual adjustment on rates,” Tan said. “It’s also to send a message to the market,” he said.
The government earlier reduced its borrowing requirement from the original target, after it posted a fiscal surplus in the first half of 2015.