The peso falls to its lowest point in almost 19 months

The PESO fell to a near 19-month low on Thursday on the back of a strong dollar, while US Treasury yields rose on the back of a hawkish US Federal Reserve.

The local unit closed at P58.635 per dollar on Thursday, weakening by 21.5 centavos from the P58.42 FThis was evident from data from the Bankers Association of the Philippines on Wednesday.

This was the worst for the peso Fwill end in almost 19 months or since the close of P58.80 per dollar on November 3, 2022.

The local unit is now down by P3.265 from its end-2023 closing rate of P55.37 against the dollar.

The peso opened Thursday’s session weaker at P58.50 against the dollar, already an intraday best. The worst performance was P58.73 against the dollar.

The dollar fell to $1.39 billion on Thursday from $1.4 billion on Wednesday.

The peso fell due to a generally stronger dollar following a rise in U.S. Treasury yields, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said. in a Viber message.

“The dollar strengthened across the board thanks to higher Treasury yields and recent aggressive statements from the Fed. The market was a bit on the edge, with persistent inflation potentially signaling longer interest rates,” Security Bank Corp. Chief Economist Robert Dan J. Roces said. also in a Viber message.

The dollar held steady on Thursday after rising to a two-week high as a rout in US Treasuries pushed yields higher, boosting the currency’s appeal, Reuters reported.

The index tracking the US currency against its major peers climbed overnight to 105.18, its highest level since May 14, and was slightly lower at 105.05 in early European trading.

A two-day rise of 15 basis points to above 4.6% in long-term Treasury yields helped push the dollar higher. The rise in yields, which move opposite to prices, has been driven by a wave of stronger-than-expected data and tough words from the Federal Reserve.fficials and a series of poorly received bond auctions.

Expectations for a Federal Reserve rate cut this year have been lowered as there are signs of continued growthFmost recently with a surprising rise in consumer confidence in Tuesday’s data.

According to CME Group’s FedWatch Tool, traders are currently seeing a 56.6% quote on a quarter-point cut at the end of the September meeting, compared to the 57.5% quote a week ago.

Before Friday, Mr. Roces said peso-dollar trading will be driven by the second estimate FUS first quarter gross domestic product will be released tonight.

Mr. Ricafort expects the peso to fluctuate between P58.50 and P58.70 per dollar on Friday. — AMC Sy of Reuters