Peso slips to fresh record low on rate cut bets

THE Philippine peso weakened to a new record low against the dollar on Thursday as markets priced in the possibility that the Bangko Sentral ng Pilipinas (BSP) could cut interest rates ahead of the US Federal Reserve.

- Aaron Michael C. Sy

The local currency closed at P59.46 a dollar, down two centavos from Wednesday's record-low finish of P59.44, data from the Bankers Association of the Philippines showed.

The peso opened Thursday’s session slightly stronger at P59.43, touched an intraday high of P59.35, and weakened to as low as P59.47. Dollar trading volume rose to $1.079 billion, higher than the $951 million recorded the previous day.

“The dollar-peso closed higher on prospects of a narrowing interest rate differential, with the BSP expected to cut rates before the Fed,” a trader said by telephone.

Another trader said the peso continued to soften after recent US producer inflation and retail sales data underscored the resilience of the American economy, reinforcing expectations that the Fed will keep policy rates unchanged in the coming months.