25 Nov Peso weakens as Fed policy makers flag inflation risks
The peso weakened versus the greenback on Thursday as the minutes of the US Federal Reserve’s latest meeting showed policy makers are concerned over elevated inflation.
The local unit closed at P50.39 per dollar on Thursday, shedding five centavos from its P50.34 finish on Wednesday, based on data from the Bankers Association of the Philippines.
The peso opened Thursday’s session slightly weaker from its previous close at P50.35 per dollar. Its worst showing was at P50.545, while its intraday best was at P50.33 versus the greenback.
Dollars exchanged increased to $1.209 billion on Thursday from $909.4 million on Wednesday.
A trader said in an e-mail that the peso weakened as Fed officials flagged the possibility of continued elevated inflation.
The minutes of the Fed’s Nov. 2-3 meeting released Wednesday showed many central bankers were of the view that elevated prices could become more persistent, according to Reuters.
Based on the statement, many officials said the Fed should be prepared for a quicker tapering of asset purchases if inflation remains elevated.
Market participants also preferred the dollar over the peso following the release of data showing improvements in the US job market, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Data from the US Labor department showed initial jobless claims dropped to 52-year low of 199,000 for the week ended Nov. 20. This is the lowest level since mid-November 1969.
For Friday, both Mr. Ricafort and the trader gave a forecast range of P50.30 to P50.50 per dollar. — L.W.T. Noble with Reuters