The peso weakened by 13 centavos against the US dollar on Wednesday and stayed at a five-year low in line with expectations and following a statement from a US Fed official that September is likely an appropriate time to hike interest rates.
The Philippine currency closed at P45.74 to $1, dropping in value from P45.61 on Tuesday.
Wednesday’s close was the lowest finish for the peso since it settled at P45.90 on July 28, 2010.
“[The] peso moved in line with the rest of its Asian peers as the dollar surged against all currencies, with the Fed poised to hike [rates]in September,” Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands, said.
Mapa said expectations for a Fed rate hike next month were triggered by comments from Atlanta Fed President Dennis Lockhart that September may be the right time for the Fed to lift interest rates, which he supports, and that only a severe shift in economic trends could deter that move.
The Philippine peso opened on the soft side at P45.72 to $1 on the Philippine Dealing System (PDS) on Wednesday before weakening further to P45.74 at the close.
Total volume transacted on the PDS fell to $639.6 million from $683.4 million in previous trade.