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Peso closes at P50:$1, its weakest in 10 years

The Philippine peso closed at P50 to a dollar on Friday, depressed by prospects of higher interest rates in the US and President Donald Trump's proposed tax plan.

The local currency shed 3 centavos to close at P50:$1 from 49.970 on Thursday.

"This is the first time in a little more than 10 years that peso closed at P50. During this period, the peso breached P50 intraday," ING Bank Manila senior economist Joey Cuyegkeng, told GMA News Online.

It was the lowest for the Philippine currency since it traded at P50.12:$1 on November 11, 2006.

Guian Angelo Dumalagan, market economist at the Land Bank of the Philippines, noted Federal Reserve Chair Janet Yellen signaled the likelihood of an interest rate increase during the Fed's policy meeting next month.

"The peso depreciated today, as generally hawkish statements from Fed Chair Yellen increased the chances of a rate hike this March," Dumalagan.

During her testimony before the US Senate Banking Committee, Yellen spoke in support of a near-term rate hike and the markets also saw robust US inflation and retails sales data, Reuters said in a report.

"Moreover, the peso also weakened due to expectations of an announcement next week from President Trump about the details of the 'phenomenal' tax plan," Dumalagan added.

Early this month, Trump promised to unveil a major tax cut to ease the burden on businesses.

Dumalagan said investors are now preparing for upcoming risks.

"A higher interest rate and the announcement of tax cuts could boost the dollar as a consequence," he noted.

Cuyegkeng noted the demand for the greenback this week pressured the peso, "leaving some traders to cover shorts before the weekend."

Week-on-week, the local unit shed 14 centavos from P49.860:$1 on February 10. Year-to-date, it lost 28 centavos from 49.720 on December 29, the last trading day of 2016. — VDS, GMA News