Peso extends losing streak to near 13-yr. low

The Philippine peso depreciated to a fresh low of nearly 13 years for the third consecutive trading day on Wednesday.

The local currency sagged against the dollar as the forex market entertained fears of higher interest  rates, according to economists.

The peso closed at P54.325:$1, weaker by 1.5 centavos from P54.310:$1 on Tuesday, its weakest in nearly 13 years since closing at P54.425:$1 on Nov.22, 2005.

“PSE down yet again, with foreign selling plaguing the stock market for the 20th straight session.  The currency was also on the backfoot ahead of the Fed’s monetary policy decision, with market players looking to the ‘dot plot’ and commentary from Powell for direction,” Nicholas Mapa, senior economist at the ING Bank, said.

“The dot plot is published after each Fed meeting. It shows the projections of the 12 members of the Federal Open Market Committee (FOMC), the rate-setting body within the Fed,” according to personal finance, career, and small business platform The Balance.

Fed Chair Jerome Powell is also expected to issue a statement regarding the policy decision.

The FOMC is holding a two-day policy meeting on September 25 to 26, and is yet to make an announcement on its stance on interest rates.

“Fears that the Fed would turn even more hawkish than expected, possibly dropping the adjective “accommodative” to describe monetary policy in the United States as the economy continues to hum,” said Mapa.

The market is also waiting for the policy meeting of the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board on Thursday, September 27.

“Decisive commentary from the BSP, on the other hand, may have helped stay the weakness of the peso as the central bank looks to shore up confidence in the market, pledging to remain ready, willing and able to tighten monetary policy to get inflation expectations re-anchored,” Mapa noted.

Ruben Carlo Asuncion, chief economist at the Union Bank of the Philippines, said market expectations are having a heavy influence on the forex market.

“Although the US dollar has weakened previously, investors are anticipating a 50 bps rate hike by the BSP at the Thursday meeting. Though strong, it may not be enough,” said Asuncion. —VDS, GMA News