The peso returned to a five-year low in Thursday trade as market players favored the dollar after the United States Federal Reserve decided to keep its key interest rates steady.
The Philippine currency dropped in value to P45.62 to $1, losing 9 centavos from its P45.53 close on Wednesday.
Thursday’s close was the lowest finish for the peso in five years since it settled at P45.73 on July 29, 2010.
“As expected, the Fed kept its monetary policy unchanged at the close of its policy meeting.
The Fed, however, cited gains in economic activity in general, with household spending gaining, although business investment and net exports were weak,” the Bank of the Philippines Islands (BPI) said in a research note.
The Fed noted that inflation continued to “run below the longer-run objective, reflecting earlier declines in energy prices and non-energy imports,” the research note said.
However, the Philippine bank added: “Market players viewed the statement as hawkish, expecting a move by the Fed [to hike rates]as early as September.”
The local currency opened at P45.55 to $1 on the Philippine Dealing System (PDS) on Thursday before trading between P45.55 and P45.65.
Total volume transacted on the PDS rose to $690.55 million from $507.7 million in previous trading.