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Peso weakens on dovish Fed comments

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BW FILE PHOTO

THE PESO weakened against the dollar on Friday as the market positioned following dovish pronouncements from a US Federal Reserve official and ahead of the release of US data on consumer confidence.

The local unit ended the week at P51.04 versus the greenback, down seven centavos from its P50.97-per-dollar finish on Thursday.

The peso opened the session at P51 against the US currency, slipping to as low as P51.06. Meanwhile, its best showing stood at P50.92 versus the dollar.

Trading volume thinned to $1.095 billion from the $1.22 billion that switched hands the previous session.

A trader said the peso declined against the dollar on Friday, even as it strengthened in the morning session following greenback’s weakness overnight.

“The peso reached P50.92 intraday due to the dollar weakness following the pronouncement of Fed Williams,” the trader said in a phone interview Friday.

New York Fed President John Williams said in a speech on Thursday that the US central bank needs to take “preventative measures” while interest rates are down and economic growth is easing than “to wait for disaster to unfold.”

His comment strengthens the case for a half-a-percentage-point cut in interest rates during Fed’s policy meeting later this month.

“Due to his comments, the dollar was mostly weaker against all currencies. However, the market may have opted to reduce short position. The market was just being cautious,” the first trader said.

Another trader added that the peso declined due to “positioning ahead of the release of US consumer confidence report [Friday night].” — Karl Angelo N. Vidal

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