Peso breaches 17-month low, now down P57.65:$1

The Philippine peso continued its losing streak for the seventh straight trading day on Friday, dipping to its lowest level in 17 months, as hawkish signals from the Federal Reserve supported the dollar’s strength while escalating tensions in the Middle East compelled investors to shy away from the local unit.

The local currency shed 46 centavos to close at P57.65:$1 from Thursday’s finish of P57.19:$1. This is the peso’s weakest level since it closed at P57.375:$1 on November 22, 2022.

This is also a new 17-month low for the local unit since November 10, 2022, when it finished at P58.19:$1.

Security Bank chief economist Robert Dan Roces said that the latest Fedspeak comments “continued to support the Fed’s patience narrative.”

The Federal Reserve officials, including its chair Jerome Powell, have signaled that interest rates will be higher for longer amid a “sticky” inflation in the United States.

“Overall, with the current backdrop of heightened inflation and geopolitical tensions, the US dollar is expected to continue to rally,” Roces said, adding that “much will depend on developments in the Middle East, which seems to be the main catalyst.”

Rizal Commercial Banking Corp. chief economist Michael Ricafort, likewise, said the peso’s weakness was due to “flight to the safety of the US currency” amid “increased risk aversion [due to] renewed geopolitical risks after Israel retaliated through missile attacks to Iran.”

Ricafort added that the US dollar’s strength came after the latest hawkish cautious signals on Fed rate cuts from some Federal Reserve officials.

The Bangko Sentral ng Pilipinas had earlier defended the peso’s recent performance, saying it was just adjusting to several events overseas — initially the events in the Middle East, and today to a speech by Federal Reserve chair Jerome Powell. —NB, GMA Integrated News