Peso down on hawkish Fed, faster US consumer inflation

BW FILE PHOTO

THE PESO retreated versus the greenback on Thursday following hawkish signals from the US Federal Reserve as well as faster US inflation.

The local unit closed at P52.495 per dollar on Thursday, down by 22 centavos from its P52.275 finish on Wednesday, data from the Bankers Association of the Philippines showed.

The peso opened Thursday’s session at P52.28 versus the dollar, which was also its intraday best. Meanwhile, its weakest showing was its close of P52.495 against the greenback.

Dollars exchanged increased to $1.08 billion on Thursday from $898.9 million on Wednesday.

The peso depreciated on Thursday due to hawkish signals from a key Fed official, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Bloomberg reported that Federal Reserve Bank of Atlanta President Raphael Bostic said they are open to increasing interest rates to manage growth if inflation remains persistently elevated.

“If inflation stays at high levels or levels that are too high — by too high, it’s really not moving back towards our 2% target — then I am going to be supporting moving more,” Mr. Bostic said.

Meanwhile, a trader in a Viber message said the peso weakened as US consumer inflation rose quicker than expected.

Data from the US Labor Department released Wednesday showed US consumer prices rose by 8.3% on an annual basis in April.

For Friday, Mr. Ricafort gave a forecast range of P52.35 to P52.55, while the trader expects the local unit to move from P52.40 to P52.60. — L.W.T Noble with Bloomberg

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