MANILA - (UPDATE) The peso weakened to P50 against the dollar on Thursday, as the greenback strengthened on hawkish statements from US Federal Reserve Chairman Janet Yellen, analysts said.
The local unit was expected to weaken further according to analysts, with the Fed tightening pace under pressure from inflationary policies of US president elect Donald Trump, who will assume office on Friday (early Saturday in Manila).
The peso opened at P50 to the dollar and ended the day at P49.98. It closed at P49.97 on Wednesday.
Bangko Sentral ng Pilipinas Governor Amando Tetangco signaled last week that he was ready to “smoothen sharp fluctuations” in the exchange rate.
Yellen’s comments overnight indicated that the Fed “would most likely stick to their game plan,” Security Bank treasurer Raul Pedro told ABS-CBN News. The peso’s movement was in line with regional peers, he added.
The Fed chief’s statements meant she was “ready to raise interest rates further if the US economy strengthens,” said another currency trader from a major bank.
In December, the Fed raised the target federal funds rate by 25 basis points and signaled up to three more increases this year.
Higher interest rates are expected to drive funds back to the US from the Philippines and other emerging markets.