Upcoming Fed rate decision keeping peso soft vs. US dollar

Speculations that the Federal Reserve is ready to come up with another interest rate hike have been blamed for the recent four-day depreciation of the Philippine peso, an analyst said Wednesday.

The Philippine peso has been on a four-day decline so far since Thursday last week, December 13, ahead of the monetary policy meeting of the US Federal Open Market Committee (FOMC) on December 18 and 19.

On Tuesday, the local currency slipped to the P53:$1 level. It closed at P53.07:$1 from P52.98:$1 on Monday.

“It’s ... the anticipation of the Fed decision. It’s a mixed bag of leaning towards maintaining, or they could increase rates further. Basically, it’s more of the Fed. People are waiting for the Fed,” Astro del Castillo, managing director at First Grade Finance Inc., said.

According to a recent report by Reuters, the US Federal Reserve is expected to raise interest rates this week, which would be its fourth for the year.

“Basically, it’s more of the Fed. People are waiting for the Fed, when we’ll have a clear indication,” Del Castillo said.

The US Federal Reserve is expected to release its decision at 2:00 p.m. Eastern Time on Wednesday, or 3:00 a.m. Thursday in the Philippines. —VDS, GMA News