Peso retreats as market awaits Fed rate hike word

The peso retreated against the dollar on Tuesday, as the currency market awaits the US Federal Reserve's statement on a possible interest rates increase in the world's largest economy.

 

The local currency retreated by 3 centavos to 45.53:$1 from the previous close of 45.5. This cut short the peso's recovery from a three-day losing streak against the greenback on Tuesday.

 

The dollar appreciated as market participants anticipate announcements from the two-day meeting of the US central bank's Federal Open Market Committee (FOMC) regarding a possible increase in interest rates this year.

 

In the previous FOMC meeting, US Federal Reserve Chairperson Janet Yellen noted that any increase in interest rates would depend on economic reports including employment and inflation figures. 

 

"Three centavos is not a significant move. It could reflect short-dollar position before the FOMC decision tonight. It's more of a market-driven movement," said ING Bank Chief Economist Joey Cuyegkeng. 

 

The decline in the local currency does not signal a weakness in the Philippine economy, he noted. – VS, GMA News