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Peso falls back to P55:$1 level

The Philippine peso lost more ground against the US dollar on Friday, dropping back to the P55:$1 level.

The local currency closed at P55.09:$1, 11.5 centavos weaker than P54.975:$1 on Thursday.

This is the weakest for the peso in nearly 17 years since it closed at P55.26:$1 on October 25, 2005.

The first time the local unit hit P55:$1 this year was on Wednesday when it finished at P55.06.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the peso’s weakness was amid the stronger US dollar against major global currencies recently due to hawkish signals from US Federal Reserve officials.

Federal Reserve Chair Jerome Powell earlier this month said the 75-basis point hike was "essential" to tame inflation, adding that policymakers have the arsenal they need and the resolve to restore price stability moving forward.

The Bangko Sentral ng Pilipinas (BSP) last week hiked key policy rates by 25 basis points, marking the second straight month of hikes. This was lower than the market expected.

Ricafort said market sentiment was also partly weighed by expectations of higher local inflation data, softer local net foreign portfolio investments, and a slowdown in local manufacturing data.

The peso weakened by 10.5 centavos, or 0.2%, for the entire week, narrower than last week's weakness of P1.235, "thereby signaling some stabilization in the foreign exchange rate movements," the economist said, noting that the local unit has weakened for the sixth straight week.

Since the start of 2022, the peso has already weakened by a total of P4.091, or 8%, against the end-2021 closing rate of P50.999:$1. —VBL, GMA News