Peso drops to P44.45 to a dollar

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The Philippine peso further dropped to P44.45 to a dollar on Thursday, the first trading day of 2014.

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The local currency shed 6 centavos from the P44.39 per dollar close on December 27, the last trading day of 2013.

A trader said that the peso’s depreciation may still be attributed to the tapering of the bond-buying program of the United States, which will start this month.

The US Federal Reserve announced that starting this month, it would reduce its $85-billion quantitative easing (QE) program by $10 billion to $75 billion, citing a string of upbeat data indicating the world’s number one economy is strengthening.

The Federal Open Market Committee (FOMC) would cut its monthly long-term Treasury on purchases to $40 billion and mortgage-backed securities to $35 billion a month, for a $10-billion reduction in the US bond-buying program.

It added that it would likely take “further measured steps at future meetings” if the economy continues to improve while keeping interest rates a record lows “well past the time” the unemployment rate declines below 6.5 percent—its previous cut-off point before tightening monetary policy.

The QE program, which was meant to stimulate the US economy, has fueled an investment splurge in emerging Asia over the past year.

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