By Aaron Michael C. Sy, Reporter
THE PHILIPPINE peso weakened against the dollar on Tuesday to breach the P56 level amid signals that the Bangko Sentral ng Pilipinas (BSP) might follow the US Federal Reserve’s easing cycle this year.
It closed at P56.01 a dollar, 32 centavos weaker than Monday’s close, based on Bankers Association of the Philippines data posted on its website.
This was the peso’s weakest close since P56.055 on Dec. 13. It opened at P55.73 and appreciated to as much as P55.635. It weakened to as much as P56.09 against the greenback.
Dollars exchanged jumped to $2.22 billion from $1.54 billion on Monday.
The peso weakened after Finance Secretary Benjamin E. Diokno told Bloomberg Television on Monday the Philippine central bank could mirror the US Federal Reserve’s rate cuts this year, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. said in a Viber message.
“Right now, the policy rate is at 6.5% so I see something like 5.5% by the end of 2024,” Mr. Diokno said. “The timing, of course, would be data-dependent and probably toward the second semester.”
The BSP raised borrowing costs by 450 basis points (bps) from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%.
The Monetary Board will hold its first policy meeting of the year on Feb. 15.
The Fed has hiked borrowing costs by 525 bps to 5.25-5.5% from March 2022 to July 2023. The Federal Open Market Committee will hold its first policy meeting this year on Jan. 30-31.
“The peso weakened past the P56-level from the lingering impact of stronger US employment reports last Friday,” a trader said in an e-mail.
The trader said the peso could recover on Wednesday “ahead of potentially softer US consumer inflation reports and local profit-taking by market participants.”
The trader sees the peso moving between P55.80 and P56.05 a dollar, while Mr. Ricafort expects it to range from P55.90 to P56.10.
