Peso plunges to fresh all-time low of P58:$1

The Philippine peso extended its losses on Wednesday, marking its worst performance due to the anticipation of further rate hikes.

The local currency shed 52 centavos to close at P58:$1 from Tuesday’s finish of P57.48:$1, which was the previous record low.

The latest performance is the eighth all-time low so far this year, following previous records on September 2 (P56.77:$1), September 5 (P56.999:$1), September 6 (P57.00:$1), September 8 (P57.18:$1), September 16 (P57.43:$1), and September 20 (P57.48:$1).

The continued weakness of the local currency comes as the market expects another major rate hike in the United States, with the Federal Reserve set to meet on September 21.

The Federal Open Market Committee (FOMC) is widely anticipated to increase interest rates by between 75 basis points to as much as 100 basis points.

“Rate hike expectations continued to put pressure on the peso today, and as such BSP should opt for a stronger message by way of clearer forward guidance beyond the actions tomorrow,” Security Bank Corporation chief economist Robert Dan Roces said in a mobile message.

“Inflation is an upside risk with weaker peso,” he added.

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) is scheduled to hold its policy meeting on Thursday, September 22, with BSP Governor Felipe Medalla maintaining a hawkish stance.

Medalla last month said food supply and petroleum prices must first be addressed before a pause in tightening can be considered.

Inflation clocked in at 6.3% in August, slightly slower than the 6.4% recorded in the previous month but still faster than the 2% to 4% target range of the central bank. — BM, GMA News