The peso breached the 63-to-a-dollar level yesterday, closing at a fresh record low as US inflation heated up, reinforcing expectations of prolonged high interest rates and boosting the dollar against emerging-market currencies.
Data from the Bankers Association of the Philippines showed the peso closed at 63.06 to $1, weakening by 19 centavos from Wednesday’s 62.87 finish. It
surpassed the previous record closing low of 62.90 set on Oct. 8.
The currency opened at 62.83 and traded between 62.75 and an all-time intraday low of 63.15 before recovering some ground at the close. Trading volume jumped by 59.6 percent to $1.5 billion from $941 million the previous day.
UnionBank chief economist Ruben Carlo Asuncion said stronger US inflation and expectations that the Federal Reserve would keep interest rates elevated for longer supported the dollar and pushed up US Treasury yields.
The trader expects the peso to remain volatile and tilted toward further weakness as the Bangko Sentral ng Pilipinas (BSP) enters its quiet period ahead of next week’s policy meeting, leaving market participants awaiting guidance on its response.
A weaker peso raises the local currency cost of dollar-priced imports such as fuel, potentially adding to business expenses and consumer prices.
