The peso slid to weakest level in nearly six years on Monday, tracking other regional currencies, as strong US jobs data increased the likelihood of a Fed rate hike before the end of the year.
The peso lost 15 centavos to end the day at P47.16 to the dollar, its weakest close since November 27, 2009 when it dived to P47.20:$1.
Nicholas Mapa, associate economist at the Bank of the Philippine Islands (BPI), noted that the dollar gained strength following last Friday’s release of US non-farm payrolls data that showed more jobs had been added than expected.
This, he said, had pushed the “ chance of a Fed rate hike in December to 68 percent … [this]was at 50 percent prior to the non-farm payroll [data release].”
The rest of the week will see a “strong US dollar theme … with expectations for a Fed lift-off in December hogging the limelight,” Mapa said.
“Up next, we’ll have third quarter gross domestic product from major eurozone … On the local front, the BSP [Bangko Sentral ng Pilipinas] meets on Thursday with [Governor Amando] Tetangco [Jr.] seen to keep rates unchanged but watch for any rhetoric on the IRC (interest rate corridor) and the shape of the curve,” he added.
The peso opened at P47.10 to $1 at the Philippine Dealing System (PDS) before trading as low as P47.21. Total volume transacted rose to P720.4 million from P590.80 million last Friday.