By Julito G. Rada | Jun. 15, 2015 at 11:01pm
The peso further weakened to a 14-month low of 45.20 against the US dollar Monday from 45.20 Thursday, driven by the uncertainty on whether or not the US Federal Reserve will announce an interest rate hike in its meeting on Thursday.
Philippine stocks also sank after the collapse in Greece’s talks for aid overnight sapped demand for riskier assets.
The peso fell to its weakest level since 45.20 on Jan. 29, 2014. Total volume traded reached $584 million, down from $684 million on June 11.
“The Fed is scheduled to hold its meeting on Thursday and the markets are uncertain on the Fed’s next move in terms of interest rates,” Nicholas Antonio Mapa, associate economist of the Bank of the Philippine Islands, told The Standard.
“Another reason was the concern on Greece,” Mapa said, adding the local currency might trade between 45 and 45.30 for the rest of the week.
Negotiations between Athens and its EU-IMF creditors collapsed on Sunday “bringing the threat of a Greek exit from the euro closer than ever.”
The peso breached the 45-to-a-dollar mark on June 8 as strong US jobs data in May boosted the greenback versus most currencies. It closed at 45.025.
Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said earlier the exchange rate was one of those high-frequency market indicators that react quickly to market developments as much as with market noises.
Victor Abola, economist of the University of Asia & the Pacific, earlier said the strong job creation numbers in US released recently pushed up 10-year bonds to 2.41 percent, a sizeable jump from 2.12 percent end of May.
He said this and the more promising outlook would attract capital flows into the US and make the dollar stronger.
He also said the disappointing 5.2-percent first-quarter gross domestic product numbers provided sufficient reason for foreign investors in the local stock market to exit for now.