THE PESO dropped further against the dollar on Wednesday, returning to the P55 level for the first time in over a month, ahead of the release of US consumer price index (CPI) data and following mixed remarks from some US Federal Reserve officials.
The local unit closed at P55.22 against the dollar on Wednesday, depreciating by 29 centavos from its P54.93 finish on Tuesday, Bankers Association of the Philippines’ data showed.
This is the peso’s weakest close since its P55.24-per-dollar finish on March 9.
The local currency traded weaker against the dollar the entire day, opening Wednesday’s session at P55.05 versus the dollar. Its worst showing was at P55.24, while its intraday best was at P55 against the greenback.
Dollars exchanged declined to $935.98 million on Wednesday from the $1.143 billion recorded on Tuesday.
“The local currency weakened due to some market caution ahead of the US consumer inflation report tonight. The peso is expected to be influenced by the said report in tomorrow’s trading,” a trader said in an e-mail on Wednesday.
Markets are anticipating crucial US inflation data, which could give signals on how soon the Federal Reserve will end its aggressive rate hikes, Reuters reported.
After Friday’s jobs report showed a resilient US labor market, emboldening bets of a 25-basis-point (bp) hike at the Fed’s next meeting in May, investor attention is firmly on the March inflation report due later in the day.
The CPI is expected to show core inflation, which excludes volatile food and energy prices, at 0.4% on a monthly basis and 5.6% year over year in March, according to a Reuters poll, which would mark a rise from February’s 5.2% in a headache for the Fed.
“The peso exchange rate was again higher for the second straight day after mixed signals from Fed officials, mostly hawkish, but not all, increased market expectations for another 25-bp Fed rate hike,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said…
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