THE PESO dropped to its worst finish in over three years against the dollar as inflation risks mount. — BW FILE PHOTO
THE PESO weakened to an over three-year low against the dollar on Thursday as an increase in the minimum jeepney fare in Metro Manila and other regions took effect, adding to already mounting inflation concerns.
The local unit closed at P52.95 against the dollar, losing 3.5 centavos from its P52.915 finish on Wednesday, data from the Bankers Association of the Philippines showed.
This was its weakest close in over three years or since it finished at P53.10 on Dec. 20, 2018.
The peso opened Thursday’s session weaker from its previous close at P52.95 versus the dollar. Its weakest showing was at P52.97, while its intraday best was at P52.90 against the greenback.
Dollars exchanged increased to $732.62 million on Thursday from $635.56 million on Wednesday.
The local unit weakened as the minimum jeepney fare was hiked effective on Thursday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The Land Transportation Franchising and Regulatory Board (LTFRB) on Wednesday approved a P1 provisional minimum fare increase for public utility jeepneys in Metro Manila, Central Luzon and Calabarzon.
The fare hike took effect on Thursday.
This was in response to petitions filed by different transport groups amid a series of oil price hikes driven by supply chain disruptions brought by the ongoing conflict between Ukraine and Russia.
Higher fares pose another upside risk to inflation, with the headline print already reaching 5.4% in May, the fastest since the 6.1% seen in November 2018, due to rising food and transport costs.
Year to date, inflation has averaged 4.1%. This is lower than the central bank’s 4.6% forecast but above its 2-4% target for the year.
The peso also weakened as the Organization for Economic Cooperation and Development (OECD) cut its global economic outlook, Mr. Ricafort said.
The OECD, a group composed of largely wealthy nations, now expects the global economy to expand 3% in 2022, down from the 4.5% outlook in December, due to soaring global inflation.
For Friday, Mr. Ricafort expects the peso to move between P52.85 and P53 against the dollar. — KBT