Peso weakens on Fed rate comment

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The peso closed at its weakest level in a week after a US Federal Reserve governor indicated two possible policy rate hikes this year.

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The local unit shed 2.5 centavos to finish at P45.125 to $1 from P45.10 on Tuesday. Wednesday’s close was the weakest for the peso since it settled at P45.18 on June 17.

Dealers placed long-US dollar positions after Federal Reserve Governor Jerome Powell commented that the Fed may hike its rates twice in 2015, with September a real possibility.

But there was “strong two-way interest” in the market, said Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands. He said buying interest came from foreign players returning not just to the local currency market but equities as well, driving the benchmark stock index PSEi up by more than 1 percent.

The peso opened at P45.18 to $1 on the Philippine Dealing System (PDS) on Wednesday, before trading between P45.11 and P45.19
Total volume transacted on the PDS fell to $442.170 million from $659.800 million in previous trade.

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