The Philippine peso closed Wednesday’s trade at P46.32 to $1—a new five-year low—as better producer prices from the US heightened the market’s anticipation of a Federal Reserve interest rate hike in September.
The local unit lost 11 centavos from its previous close of P46.21. Monday’s close marks the weakest finish for the peso since it settled at P46.49 on July 22, 2010.
Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands, said the peso tracked the weakness in regional currencies as the markets focused on an imminent Fed rate hike, possibly as early as September.
“Accelerating [US] producer prices reported last Friday helped pad the case for an early Fed rate hike while the market remains anxious ahead of the release of the June Federal Open Market Committee meeting, later in the week,” Mapa added.
US Labor Department reported that the Producer Price Index rose 2 percent in July, beating estimates of 0.1 percent.
“Expect rough sailing for the coming days, although an acceleration in remittances may help alleviate some of the pain in the near term,” Mapa said, referring to the 5.8 percent year-on-year increase in overseas Filipino workers’ remittances in June.
The peso opened at P46.27 to $1 on the Philippine Dealing System (PDS) on Monday before trading between P46.26:$1 and P46.33:$1.
Total volume transacted on the PDS fell to $421 million from $674.4 million in previous trading.