Peso down on Hakish Fed

The PESO was devalued against the greenback on Monday as a US Federal Reserve official said it was planning to raise rates sharply to curb rising inflation.

The local unit closed at P52.27 per dollar on Monday, down 24 cents from its P52.03 close on Wednesday, according to data from the Bankers Association of the Philippines.

Local financial markets were closed for observance on Thursday 14-15 April and Good Friday.

The peso opened at P52.15 against the dollar on Monday. Its weakest performance was at P52.29, whereas its intraday best was at P52.15 in contrast to the Greenback.

The dollar exchange rate fell to 14 1.142 billion on Monday from 19 1.195 billion on Wednesday.

Michael L., chief economist at Rizal Commercial Banking Corporation. The peso has weakened due to the Fed official’s constant hoax signals, Rickfort Viber said in a statement.

Reuters quoted Cleveland Federal Reserve President Loretta Mester as saying on Thursday that the central bank would look to raise interest rates quickly enough to control inflation without pushing the economy into recession or derailing a strong job market.

“Our goal is to reduce housing at the pace needed to better balance demand with limited supply to keep inflation in check while maintaining economic activity and healthy labor market expansion,” said Mrs Mester.

The Fed raised interest rates by a quarter of a percent last month to control rising inflation.

Meanwhile, a trader said in an email that the rapid rise in US producer inflation has also been factored by the market, as it could strengthen the case for tightening monetary policy.

Data released by the U.S. Department of Labor last week showed that the producer price index for final demand rose 1.4% in March, its biggest gain since the government rearranged the series in December 2009.

For Tuesday, both Mr. Ricafort and the trader forecast P52.15 to P52.35. – LWT Nobel With Reuters