Peso P52: Hawkish Fed at $ 1 level, drowning in ongoing war
PESO has sharply retreated to return to the P52 level against the greenback on Monday amid expectations of a protracted war between the US Federal Reserve and Russia and Ukraine.
The local unit closed at P52.05 per dollar on Monday, down 46 cents from P51.59. StayFriday night, according to data from the Bankers Association of the Philippines.
This is the weakest closing of the peso in almost two weeks or since it ended the March 29 trade at P52.075 per dollar, Rizal Commercial Banking Corp. Its chief economist Michael L. Ricafort said in a Viber message
The peso opened at P51.70 against the dollar. Its weakest performance was at P52.08, while its intraday best was P51.69 vs. Greenback.
The dollar exchange rate rose to 6 1.635 billion on Monday from $ 1.056 billion on Friday.
A Fed official said the peso weakened as inflation could rise until 2023, giving it a reason to tighten its policy position more aggressively, a trader said.
Reuters quoted Cleveland Fed President Loretta Mester as saying in a TV interview that tightening Fed policy would help reduce excess demand and consequently ease price pressures.
“It simply came to our notice thenflThis is the biggest challenge now in control, ”he said.
Mr Rickafort, meanwhile, said the market had also reacted to US officials, warning that the war in Ukraine could take weeks or years.
The World Bank said in a report released on Sunday that Ukraine’s economic output is likely to fall by 45.1% this year due to Russia’s aggression, which has shut down trade.
For Tuesday, Mr Ricafort forecast P51.95 to P52.15 per dollar, while a trader said the peso could move between P52 and P52.25. – Loose Wendy T. Nobel With Reuters
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