Peso hits near 17-month low for third straight trading day

The Philippine peso extended its depreciation streak for the sixth straight trading day on Thursday, with the currency hitting a near 17-month low for the third straight day following hawkish signals from the Federal Reserve.

The local currency shed a centavo to close at P57.19:$1 from Wednesday’s finish of P57.18:$1. This is the worst performance since the peso closed at P57.375:$1 on November 22, 2022.

According to Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort, Thursday’s weakness comes after recent remarks made by officials of the Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).

“The US dollar/peso exchange rate was higher for the sixth consecutive trading day… (after the) latest cautious signals from Fed officials on possible Fed rate cuts (Mester, Bowman),” he said in a commentary.

This comes as Federal Reserve chair Jerome Powell earlier signaled that there may be a delay in policy rate cuts, as inflation in the United States has been sticky.

Ricafort also cited recent remarks made by BSP governor Eli Remolona Jr., who said that policy rates could be cut by the fourth quarter of 2024, or as late as the first quarter of 2025 should inflation continue to be elevated.

“We’re still (in the) second quarter, so we have plenty of time. I would say the central scenario would be (a) fourth-quarter ease. If things are worse, then I think that might be postponed to the first quarter of 2025,” Remolona said Wednesday.

He also earlier said that the central bank was still comfortable with the peso's movement, as it was just adjusting to recent events and due to the strength of the greenback.

During its last policy meeting on April 8, the Monetary Board decided to keep rates unchanged — the target reverse repurchase (RRP) rate at 6.5%, the overnight deposit rate at 6.0%, and the overnight lending facility rate at 7.0%.

This is the highest the benchmark rate has been at in nearly 17 years since it was kept at 7.5% in May 2007.—AOL, GMA Integrated News