THE PESO sank to a new near 17-year low against the dollar as data released on Tuesday showed headline inflation was above 6% in June. — BW FILE PHOTO
THE PESO hit a new near 17-year low against the dollar on Tuesday following the release of data showing June headline inflation was at 6.1%, an over three-year high.
The local unit closed at P55.23 per dollar on Tuesday, down by 15 centavos from its P55.08 finish on Monday, Bankers Association of the Philippines data showed.
This is the peso’s weakest close in nearly 17 years or since Oct. 25, 2005, when it ended at P55.26 versus the greenback.
The local unit opened Tuesday’s session at P55 against the dollar. Its weakest showing was at P55.25, while its intraday best was at P54.98 versus the greenback.
Dollars exchanged rose to $1.29 billion on Tuesday from $976.26 million on Monday.
For the year so far, the peso has weakened by P4.23 or 8.29% from its Dec. 31, 2021 close of P51 per dollar.
“The peso recorded new lows today due to local caution from the stronger-than-expected Philippine inflation for June 2022 at 6.1%,” a trader said.
“The peso exchange rate weaker for the second day in three trading days… after the latest headline inflation data at a new 3.5-year high of 6.1% and after the higher US dollar versus major global currencies,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
“The latest movement in the local currency market was also partly brought about some slight upward correction/pickup in US Treasury yields and in global crude oil prices,” Mr. Ricafort added.
Headline inflation in June surged to 6.1% year on year from 5.4% in May and 4.1% a year ago amid higher food and transport costs, preliminary data from the Philippine Statistics Authority released on Tuesday showed.
The June headline print is a near four-year peak, matching the pace recorded in November 2018 and was the fastest since the 6.9% logged in October 2018.
Year to date, inflation has averaged 4.4%, higher than the 4% seen in the same period a year ago but lower than the central bank’s 5% forecast for the year.
Meanwhile, US Treasury yields returned from the holiday higher, with the yield on benchmark 10-year notes at 2.952% but failing to push back above the symbolic 3% level, Reuters reported.
Brent crude futures gave up early gains to trade down 0.2% at $113.28 a barrel.
For Wednesday, the trader said the peso may weaken further against the dollar ahead of the release of the minutes of the US Federal Reserve’s June meeting, which they expect to have a hawkish tone.
The Fed hiked rates by 75 basis points at its June review, the biggest increase since 1994, as it seeks to control runaway inflation.
The trader expects the peso to move between P55.15 and P55.35 against the dollar on Wednesday, while Mr. Ricafort gave a forecast range of P55.20 to P55.30. — K.B. Ta-asan with Reuters