Peso sinks to three-week low as Powell signals caution on cuts – BusinessWorld Online
THE PESO sank to a three-week low against the dollar on Wednesday after US Federal Reserve officials gave a cautious view on future cuts due to sticky inflation and a weak labor market.
The local unit closed at P57.461 versus the greenback, dropping by 16.6 centavos from its P57.295 finish on Tuesday, Bankers Association of the Philippines data showed.
This was its worst showing in over three weeks or since it closed at P57.51 on Sept. 2.
The peso opened Wednesday’s session weaker at P57.33 versus the dollar. Its intraday high was at just P57.31, while its worst showing was at P57.49 against the greenback.
Dollars exchanged went down to $1.73 billion on Wednesday from $1.86 billion on Tuesday.
“The dollar-peso closed higher but traded at a narrow range on cautious trading due to lack of market catalysts, but mostly tracking dollar strength due to the hawkish turn in Fed statements,” a trader said by telephone.
The dollar was also supported by increased geopolitical risks as US President Donald J. Trump ramped up his rhetoric against Russia, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
For Thursday, the trader said the peso could move between P57.30 and P57.60 per dollar, while Mr. Ricafort expects it to range from P57.30 to P57.50.
The US dollar edged higher on Wednesday, rebounding from its lowest level in nearly a week, after Federal Reserve Chair Jerome H. Powell struck a cautious tone on further easing overnight, though markets still priced in two more rate cuts this year, Reuters reported.
Key for markets now is the expectation of quarter-point rate cuts at the remaining two Fed meetings this year and another in the first quarter of 2026, in line with the central bank’s guidance after last week’s meeting.
The US dollar index, which measures the currency against six major rivals, added 0.35% on Wednesday to trade at 97.575, attempting to claw back ground after two straight losing sessions in which it touched its lowest since Thursday at 97.198 overnight. — AMCS with Reuters
