Peso falls as Fed minutes confirm hawkish stance

The PESO fell against the dollar for a fourth straight session on Thursday after minutes from the US Federal Reserve’s last meeting showed they are looking to move ahead Raising the cost of borrowing to fight inflation.

The local unit closed at P52.40 per dollar, down 4.5 centavos from its P52,355 fifinished on Wednesday, based on data from the Bankers Association of the Philippines.

The peso opened Thursday’s session at P52.35 against the dollar. His weakest performance was P52.49, while his intraday best was P52.28 against the greenback.

Dollars exchanged rose to $986.01 million on Thursday, from $804.2 million on Wednesday.

The peso weakened after minutes of the Fed’s meeting released overnight earlier this month showed the central bank’s hawkish stance, a trader said in a Viber message.

“Still hawkish but less hawkish compared to market estimates of the possibility of going beyond neural levels in Fed interest rates,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

All attendees at the Fed’s May 3-4 monetary policy meeting supported a half-percentage-point rate hike to curb itbottleation they agreed has become a key threat to economic output and threatens to rise further without central bank intervention, Reuters reported.

The 50 basis point hike in the Fed’s interest rate this month was the first of this magnitude in more than 20 years, and “most participants” felt that further hikes of this magnitude at the Fed’s monetary policy meetings were “probably appropriate”. June and July, according to the record.

Mr. Ricafort added that the peso weakened due to rising global oil prices.

Oil prices rose on Wednesday, buoyed by tight supply.

Brent crude futures for July rose 47 cents to $114.03 a barrel, while US West Texas Intermediate crude for July delivery rose 56 cents to $110.33 a barrel.

For Friday, the trader said the peso could rally against the dollar ahead of the second revision of US gross domestic product data.

Mr. Ricafort expects the peso to trade around P52.35 to P52.50 per dollar on Friday while the trader sees the peso trading between P52.30 and P52.50. — KB Ta-asan With Reuters