MANILA – The peso stayed at its lowest levels in a decade after the dollar strengthened on hawkish comments from Federal Reserve officials.
The peso opened at P50.22. It closed at P50.25 on Tuesday, the weakest since September 2006.
Investors are monitoring signals on the pace of interest rate increases in the US this year, which is expected to drive funds out of emerging markets and increase demand for the dollar, BPI Securities research head Haj Narvaez said.
"There’s still potential for some downside surprise in the peso. If we see three rate hikes this year. Foreign outflows makes a difference in terms of the strength oft the dollar versus the peso," Narvaez told ANC's "Market Edge with Cathy Yang."
"We’re looking at somewhere closer to 52. It could exceed 52 assuming the outflows are more aggressive than expected." he said.
Bangko Sentral ng Pilipinas Governor Amando Tetangco said Tuesday that while there was “legitimate demand” for dollars, regulators would guard against “disruptive or excessive movements.”
Federal Reserve officials hinted overnight that a rate increase could come as early as March, sending the greenback broadly higher.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.4 percent at 101.370 after hitting a six-day high of 101.600 earlier.
Against the yen, the dollar was up 0.5 percent at 113.61 yen, putting it on track for its biggest one-day gain against the Japanese currency in eight days. -- with reports from Reuters