Peso weakens anew after Yellen testimony
THE PESO weakened anew against the dollar on Wednesday, amid negative market sentiment after US Federal Reserve Chair Janet Yellen flagged a possible rate hike next month.
The local currency closed at P49.92 versus the greenback on Wednesday, reversing its gain from Tuesday’s P49.88-per-dollar finish.
Wednesday’s session saw the peso moving towards the P50-per territory, at P49.94 against the dollar, while its intraday through was at P49.95. Its peak for the day was at P49.905-to-the-dollar.
Dollars traded on Wednesday slipped to $319.5 million from the $347.5 million that changed hands during the previous session.
“The peso depreciated today, as Fed Chair Yellen’s hawkish comment last night kept open the possibility of a March 2017 interest rate hike,” a trader said in an e-mail on Wednesday.
“The US central bank head said that waiting too long to remove monetary accommodation would be unwise, hinting that another rate increase is forthcoming,” the trader added.
Ms. Yellen noted in her speech on Tuesday night that regulators may need to lift interest rates anew in their March 13-14 policy meeting as delaying the move could bring the Fed “behind the curve” and cause them to increase rates faster that would lead to a recession.
The US central bank also noted that they expect the US job market to remain robust and continue tightening as well as US inflation climbing to 2%.
However, Ms. Yellen noted uncertainties of the economic policies under US President Donald J. Trump’s administration.
While another trader said, “We opened higher due to hawkish comments from the Fed overnight, but we saw total volume only at $300 million so I don’t think there was a lot of interest from the market yesterday.”
For Thursday, one said the P49.60 to P50-to-a-dollar range will hold in the next two weeks, with markets still searching for leads. While the other trader said that the pair may move within P49.80-50 range.
“The peso might appreciate due to bets of softer US economic reports on inflation and retail sales. The peso’s rise might be tempered by another hawkish speech from Fed Chair Yellen,” one trader noted. -- Janine Marie D. Soliman