THE PESO depreciated against the dollar on Monday after Finance Secretary Benjamin E. Diokno said the central bank could cut benchmark rates by as much as 100 basis points (bps) this year.
The local unit closed at P55.69 per dollar on Monday, weakening by 12 centavos from its P55.57 finish on Friday, based on Bankers Association of the Philippines data.
The peso opened Monday’s session stronger at P55.50 against the dollar. Its intraday best was at P55.44, while its weakest showing was at P55.708 versus the greenback.
Dollars exchanged went down to $1.54 billion on Monday from $2.05 billion on Friday.
The peso was dragged lower by dovish signals from Mr. Diokno, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Mr. Diokno, who sits on the central bank’s policy-setting Monetary Board, said in an interview with Bloomberg Television that the Bangko Sentral ng Pilipinas (BSP) could mirror the US Federal Reserve’s cuts this year.
“Right now, the policy rate is at 6.5% so I see something like 5.5% by the end of 2024. The timing, of course, would be data dependent and probably towards the second semester,” Mr. Diokno said
The BSP raised borrowing costs by a cumulative 450 bps from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%.
The Monetary Board will hold its first policy meeting of the year on Feb. 15.
“The peso weakened amid the stronger-than-expected US employment and nonfarm payrolls reports for December 2023,” a trader added in an e-mail.
For Tuesday, the trader sees the peso moving between P55.55 and P55.80 per dollar, while Mr. Ricafort expects it to range from P55.60 to P55.80 — AMCS