THE PESO continued to weaken against the greenback on Thursday after the US Federal Reserve policy makers signaled their openness to discussing tapering its asset purchases.
The local unit closed at P47.94 versus the dollar on Thursday, dropping by 6.5 centavos from Wednesday’s finish of P47.875, data from the Banker’s Association of the Philippines’ website showed.
The peso opened Thursday’s session at P47.855 against the dollar. It dropped to as low as P47.98, while its intraday best was at P47.845 versus the greenback.
Dollars traded went up to $979.8 million on Thursday from $947.25 million the day before.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort and a trader said minutes of the US central bank’s latest meeting affected peso-dollar trading on Thursday.
A “number” of Fed officials appeared ready to consider changes to monetary policy based on a continued strong economic recovery, according to minutes of the US central bank’s April meeting, but data since then may have already changed the landscape, Reuters reported.
“A number of participants suggested that if the economy continued to make rapid progress toward the (policy-setting) Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,” the minutes said in the most overt reference yet to a possible taper of the Fed’s crisis-fighting bond purchases.
But that view may have suffered a blow this month with the release of data showing job growth was anemic in April. Though inflation ticked higher, also a concern cited in the minutes, the addition of just 266,000 jobs last month provided little further progress towards the Fed’s efforts to nurse the economy back to full employment.
Fed officials have pledged to keep their ultra-loose, crisis-fighting policies in place, betting that the unexpected surge in consumer prices last month stems from temporary forces that will ease on their own, and that the US jobs market needs far more time to get people back to work.
But the minutes of the April 27-28 meeting showed the Fed beginning to wrestle with the emerging difficulties of getting the $20-trillion US economy fully reopened after the disruptions caused by the coronavirus pandemic.
Mr. Ricafort added that the peso dropped after the stock market closed at its lowest level since Oct. 21. The Philippine Stock Exchange index lost 48.07 points or 0.77% to close at 6,197.64, while the broader all shares index declined by 12.59 points or 0.32% to 3,840.31.
“The local currency might appreciate on expectations of weaker US manufacturing and services sector reports,” the trader said.
The trader expects the peso to move between P47.85 and P48.05 versus the dollar on Friday, while Mr. Ricafort gave a forecast range of P47.85 to P47.95. — IBC with Reuters