PHILIPPINE PESO is open Thursday hit a record low of P59-dollar rate for the first time more than two years as the dollar continues its rally.
The peso closed at P59 against the greenback in late trade, weakening by nine cents from its close of P58.91 on Wednesday.
This marked the first time the peso returned to the P59-a-dollar level since Oct. 17, 2022.
The peso opened Thursday’s trading session at P58.93 against the dollar. Its intraday high was P58.92, while its weakest showing was its close of P59.
Dollar sales fell to $842.68 million from $1.09 billion on Wednesday.
“The weakness of USD/PHP reflects the recent increase (of the 10-year US Treasury yield), which reflects the policies of Trump 2.0 and makes the dollar rise,” said Jonathan L. Ravelas, senior consultant at professional services firm Reyes Tacandong & Co., .
Economists have been warning that US President Donald J. Trump’s proposed tariffs and tax cuts could cause inflation and could disrupt the US Federal Reserve’s easing cycle.
Reuters reported that markets are pricing in a 52% chance of a 25-basis-point (bp) cut at the Fed’s December meeting, down from 82.5% last week, according to CME’s FedWatch Tool.
A Reuters poll showed most economists expect the Fed to cut rates at its December meeting, with a much smaller cut in 2025 than expected last month because of the risk of higher inflation from Mr.
The first trader said the peso’s decline was due to “strong dollar performance and uncertainty of the Fed’s direction under Trump, as well as mixed signals from the Bangko Sentral ng Pilipinas (BSP).”
“This also shows expectations for rate cuts by the BSP. This may continue in 2025. The immediate danger is P60,” added Mr. Ravelas.
BSP governor Eli M. Remolona, Jr. This week it gave mixed signals, saying the Monetary Board could keep or cut rates at its Dec. policy meeting. 19.
He said inflationary pressures will need to moderate, while weaker-than-expected growth will pave the way for rate cuts.
Since August, the BSP has delivered a rate cut of 50 bps, bringing the benchmark to 6%.
“The peso continued to decline, closing at the 59 level, with continued uncertainty about the composition of Trump’s economic team,” said a second trader.
The group of Mr. Trump’s Treasury secretary picks have expanded to include Apollo Global Management Chief Executive Marc Rowan and former Federal Reserve Governor Kevin Warsh, Reuters reports.
Mr. Trump said he would nominate Howard Lutnick, chief executive of Wall Street brokerage firm Cantor Fitzgerald, as head of the Commerce Department.
A second trader also noted “increasing tensions between Russia and Ukraine are increasing the greenback’s need for safety.”
Russia launched a missile from the southern city of Astrakhan during an attack on Ukraine early Thursday, Reuters reported, citing the Kyiv military. It was the first time Russia had used such a powerful, long-range ballistic missile during a war.
The air force reported the launch after Ukraine fired US and British missiles at targets inside Russia this week, despite warnings from Moscow that it would see the move as a major escalation in the 33-month-old war. – Luisa Maria Jacinta C. Jocson with Reuters
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