The peso sank to a new eight-year low against the US dollar Tuesday, pulled down mainly by the looming interest rate hike by the US Federal Reserve.
The local currency lost two centavos to close at 49.85 a dollar Tuesday from 49.83 Monday. It was the local currency’s weakest level in nearly eight years, or since it settled at 49.98 a greenback on Nov. 24, 2008 at the height of the global financial crisis.
Total volume traded reached $520 million Tuesday, higher than $391.6 million Monday.
Metropolitan Bank & Trust Co. said in a report the US dollar bullrun continued, with some currencies trading at multi-year lows against the greenback.
“With the expected Fed rate hike just around the corner, expect volatility to continue as players adjust for positioning and profit-taking. For USD/PHP, the local pair has been printing new year-to-date highs almost everyday with ease as the topside seems to be the path of least resistance,” Metrobank said.
Security Bank Corp. said the expected December rate hike was short of being fully priced-in already. “We will look into rate expectations into next year. 2017 expectations should be the driver of US dollar strength into the medium term.”
Bank of the Philippine Islands’ Asset Management said with foreign selling expected to continue this week, “we expect the peso to continue falling, potentially testing the 50-level.”