THE PESO is likely to stay at the P58 level this week as the dollar will continue to be supported by the US Federal Reserve’s “higher for longer” policy stance, analysts said.
The local unit weakened to a near 20-month low on Friday, ending at P58.80 per dollar, inching down by two centavos from its P58.78 finish on Thursday, Bankers Association of the Philippines data showed.
This was the peso’s worst finish since its P58.87-a-dollar close on Oct. 24, 2022.
Week on week, the peso declined by 15 centavos from its P58.65 finish on June 14.
“Asian currencies showed mixed performance against the US dollar, with focus shifting to Friday’s US June purchasing managers’ index manufacturing data,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
The Fed’s hawkish stance continued to support the dollar on Friday, leading to a weaker peso, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.
The dollar rose against other major currencies on Friday, hitting a fresh eight-week high against the yen as data showed a strong US economy and as the Federal Reserve’s patient approach to interest-rate cuts contrasts it with more dovish peers, Reuters reported.
The dollar index, which measures the currency against six others, was last up 0.2% at 105.82. It had spiked 0.41% overnight, erasing declines for the week, following a second successive rate cut at the Swiss National Bank and hints from the Bank of England of a reduction in August.
For this week, Mr. Roces said the peso’s weakness may persist amid a strong dollar.
“Overall, major central bank rate cuts ahead of the Federal Reserve’s decision are keeping the dollar well-supported and may continue on to [this] week,” he said.
“An offsetting positive factor for the peso is the increased possibility of Fed rate cuts recently, interestingly and ironically, as the latest fed fund futures priced in nearly two Fed rate cuts for 2024,” Mr. Ricafort added.
He expects the peso to move between P58.50 and P58.80 per dollar this week. — AMCS with Reuters
