The Philippine peso weakens to its lowest close in nearly two weeks as stronger U.S. inflation expectations reinforce bets on further Federal Reserve rate hikes. Higher global oil prices add pressure on the local currency, while trading volume rises to $1.72 billion.
Highlights
- Philippine peso weakens by 45 centavos to close at P63.70 per dollar as oil prices rebound and dollar strengthens, with $1.72 billion traded Thursday.
- Brent crude rises 45 cents to $93.21 and U.S. West Texas Intermediate increases 27 cents to $86.80, contributing to peso pressure alongside Fed tightening expectations.
- U.S. dollar index hits 102.98, highest since April 2025, as traders price in more Fed hikes after strong October inflation, pressuring major currencies including euro, sterling, and yen.
Dollar strength and oil rebound weigh on peso
As reported by BusinessWorld Online, the peso falls by 45 centavos to close at P63.70 per dollar on Thursday, from P63.25 on Wednesday, according to data from the Bankers Association of the Philippines. The local currency opens the session at P63.25, which also stands as its intraday high, while its weakest level matches the closing rate of P63.70.Dollars traded increase to $1.72 billion from $1.42 billion. A trader says the peso remains under pressure as the dollar strengthens after faster-than-expected U.S. consumer inflation prompts markets to price in more Fed tightening.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort says the peso is also dragged by an upward correction in global oil prices. Oil rises on Thursday after recovering from earlier losses, with Brent crude up 45 cents to $93.21 a barrel and U.S. West Texas Intermediate gaining 27 cents to $86.80.
Market outlook centers on Fed policy cues
The trader says the peso may continue to consolidate on Friday as market participants wait for firmer signals on U.S. monetary policy, although it is unlikely to return to the P64 level. Ricafort expects the currency to move within a P63.60 to P63.80 range.Broader currency markets also reflect stronger demand for the dollar. Reuters reports that the dollar index rises 0.11% to 102.98, its highest level since April 2025, as traders increase bets on additional Fed hikes after October inflation data and hawkish remarks from U.S. central bank officials.
Some brokerages, including Goldman Sachs, now expect another rate increase early next year in addition to one in December. The euro and sterling both weaken against the U.S. dollar, while the yen remains volatile as Bank of Japan board member Toichiro Asada warns that premature rate hikes could hurt growth and suppress underlying inflation.
We recently wrote about the Philippine stock rebound even as the peso hit a record low, keeping sentiment cautious.
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