Peso declines vs dollar on cautious trade ahead of Fed

THE PESO continued to weaken against the greenback on Tuesday, reflecting cautious sentiment in market as seen in the local bourse and ahead of the policy-setting meeting of the US Federal Reserve.

The local unit closed at P48.635 per dollar on Tuesday, depreciating by 9.5 centavos from its Monday finish of P48.54 against the greenback, data from the Bankers Association of the Philippines showed.

The peso started Tuesday’s trading session at P48.55 versus the dollar. Its weakest showing was seen at P48.66 while its intraday best was at P48.51 against the greenback.

Dollars traded went down to $721.9 million on Tuesday from $798.55 million the prior day.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso’s weakness reflects cautiousness among investors that was also seen in the local bourse.

“The peso was weaker as the local stock market remains among four-month lows despite modest gains,” Mr. Ricafort said in a text message.

The Philippine Stock Exchange index rose by 6.62 points or 0.1% to finish at 6,559.08 on Tuesday after government officials said they have acquired some 30 million doses of a coronavirus disease 2019 (COVID-19) vaccine.

Meanwhile, a trader attributed the peso’s depreciation to the market’s anticipation of the US Federal Reserve’s latest policy decision.

The Federal Open Market Committee will review its stance on March 16-17. The Fed has maintained policy rates near zero in the past year. Fed policy makers are expected this week to forecast that the US economy will grow in 2021 at the fastest rate in decades, with unemployment falling and inflation rising, as the COVID-19 vaccination campaign gathers pace and a $1.9-trillion relief package washes through to households, Reuters reported.

For today, Mr. Ricafort gave a forecast range of P48.60 to P48.70 per dollar while the trader expects the local unit to move within the P48.55 to P48.75 band. — LWTN with Reuters