The peso continued to weaken against the dollar Friday on lingering inflation concerns after the central bank raised its medium-term projections for inflation.
The peso closed at P50.65 against its P50.34 finish on Thursday, according to the Bankers Association of the Philippines.
The peso opened at P50.32, with the low at P50.67 and the high at P50.24.
Dollar volume rose to $1.185 billion from $1.079 billion on Thursday.
The peso weakened by 70 centavos from the P49.95 close on Sept. 17.
“The peso weakened after the BSP (Bangko Sentral ng Pilipinas) upwardly revised its inflation projections despite keeping its policy rate unchanged,” a trader said via e-mail Friday.
During its policy-setting meeting Thursday, the BSP raised its inflation outlook for the year to 4.4% from 4.1% previously as supply issues continue to push food prices higher. This took it beyond the 2-4% target of the central bank for 2021.
Headline inflation rose to 4.9% in August from 4% in July, its highest level in more than two years, to bring the eight-month average to 4.4%.
The foreign exchange market was also reacting to indications that the Federal Reserve may start reducing its monthly bond buying program by November, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said via Viber Friday.
The Fed said Wednesday it could begin the “taper” if jobs data remain strong, Reuters reported.
Interest rate hikes may also begin next year once the bond-buying program ends, as nine of 18 Fed policymakers believe borrowing costs have to increase in 2022.
“The peso also (ended) weaker as the dollar was near one-month highs after some global safe haven shifts to the US currency in recent days (as) concerns over China Evergrande led to some profit-taking in the global financial markets,” Mr. Ricafort added. – Beatrice M. Laforga