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Peso sinks to P52:$1 level on hawkish Fed, ongoing war
![Peso sinks to P52:$1 level on hawkish Fed, ongoing war](https://businessinsiderjournal.com/wp-content/uploads/2020/03/featured9-850x560.jpg)
![Peso sinks to P52:$1 level on hawkish Fed, ongoing war](https://businessinsiderjournal.com/wp-content/uploads/2020/03/featured9-850x560.jpg)
THE PESO sharply retreated to return to the P52 level versus the greenback on Monday amid hawkish signals from the US Federal Reserve and expectations of a prolonged war between Russia and Ukraine.
The local unit closed at P52.05 per dollar on Monday, shedding 46 centavos from its P51.59 finish on Friday, based on Bankers Association of the Philippines data.
This is the peso’s weakest close in almost two weeks or since it ended trading at P52.075 per dollar on March 29, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The peso opened at P51.70 against the dollar. Its weakest showing was at P52.08, while its intraday best was at P51.69 versus the greenback.
Dollars exchanged increased to $1.635 billion on Monday from $1.056 billion on Friday.
The peso weakened after a Fed official said inflation could remain elevated until 2023, giving it a reason to tighten its policy stance more aggressively, a trader said.
Reuters reported that Cleveland Fed President Loretta Mester in a TV interview said the Fed’s policy tightening will help to reduce excess demand and in turn bring price pressures down.
“It is very important that we get inflation under control. That is the biggest challenge right now,” she said.
Meanwhile, Mr. Ricafort said the market also reacted to US officials warning that the war in Ukraine could take weeks or years.
World Bank in a report released on Sunday said Ukraine’s economic output will likely shrink by 45.1% this year amid the Russian invasion that has shuttered businesses.
For Tuesday, Mr. Ricafort gave a forecast range of P51.95 to P52.15 per dollar, while a trader said the peso could move within P52 to P52.25. — Luz Wendy T. Noble with Reuters