MANILA (UPDATE) – The peso held at its lowest levels in a decade, weighed down by a strong dollar as investors braced for interest rate increases by the Federal Reserve, which could come as early as this month, analysts said.
The peso dipped to P50.40 against the dollar on Friday, from Thursday’s close of P50.31, according to the Philippine Dealing System.
The local unit could depreciate to as much as P50.50 ahead of a Federal Reserve meeting next week, but there would be “some degree of stabilization in the next couple of months,” said Callum Henderson, managing director for Asia Pacific at Eurasia Group.
“The fundamental story is all currencies are under pressure in the wake of the strong dollar at the moment,” Henderson told ANC’s “Market Edge with Cathy Yang.”
The markets will look to the Bangko Sentral ng Pilipinas for assurance on the stability of the exchange rate, Abacaus Investment Corp director for corporate finance Manny Ocampo said in a separate interview.
“I think what BSP will try to do is (say) we are there to the banks. Please do not speculate on the peso-dollar rate,” he said.
The central bank had said that it would guard against wild swings in the exchange rate. There was no immediate comment from the monetary authority on Friday.