The peso fell to a new six-year low against the US dollar, losing P0.11 to close at 47.345 a dollar Monday, as the anticipated rate hike by the US Federal Reserve this week buoyed the greenback against most currencies.
This was the local currency’s weakest level since closing at 47.47 against the dollar on Oct. 28, 2009 at the height of the global financial crisis. The peso settled at 47.235 against the greenback Friday.
Total volume turnover on Monday reached $514 million, higher than $486 million Friday.
“Actually, most of the regional currencies were affected, except the Japanese yen. Part of the dollar’s strength was the expected rate hike in the US this week,” Emilio Neri Jr., lead economist of the Bank of the Philippine Islands, said in a phone interview.
“Also, there was a risk-off sentiment because of this Third Avenue Fund which had a cheap redemption which apparently did not anticipate the interest rates hike by the Fed this month,” Neri said.
Neri, however, expressed optimism there would be a relief for the peso after the Fed’s announcement on the rate hike decision on Wednesday (Thursday, Manila time).
“It makes sense for the peso to depreciate… The peso’s weakness is good for BPOs [business process outsourcing] sector and overseas Filipino workers….,” Neri said.
The peso breached the 47-a-dollar level on Nov. 9, closing at 47.16 from 46.935 a day earlier. It further weakened to 47.26 a dollar on Nov. 10, as the imminent Fed lift-off strengthened the dollar against other currencies.
Nicholas Antonio Mapa, research officer of BPI, earlier said the strong dollar trend could be seen this month or until “any weak US data or comments from the Fed send the currency pair back lower.”
Bangko Sentral Deputy Governor Diwa Guinigundo earlier said the exchange rate target of 43 to 46 a dollar remained doable this year, despite the volatilities in the global financial markets.