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Peso sinks to P50:$1 level ahead of Fed meet

THE PESO weakened on Monday due to safe-haven demand for the dollar ahead of the US Federal Reserve’s policy review this week.

The peso closed at P50.24 per dollar on Monday, shedding 29 centavos from its P49.95 finish on Friday, based on data from the Bankers Association of the Philippines.

This was the peso’s weakest close in nearly a month or since Aug. 23, when it ended trading at P50.27 per dollar.

The peso opened Monday’s session at P50.08 per dollar. Its weakest showing was at P50.24, while its intraday best was at P50.05 versus the greenback.

Dollars exchanged rose to $1.117 billion on Monday from $871.75 million on Friday.

A trader said the peso weakened ahead of the Federal Open Market Committee’s policy meeting on Sept. 21-22. Markets expect Fed officials to give a clearer guidance on its plan to reduce its bond purchases.

However, a Reuters poll found that 36 out of 49 economists expect the Fed’s taper announcement will be done in November and not this month.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said external debt data released last week also caused the peso to drop.

External debt hit $101.2 billion as of end-June, rising by 15.7% from the $101.2 billion a year earlier, based on data released by the Bangko Sentral ng Pilipinas (BSP) on Friday evening. This was the highest since at least the end of 2011, based on available BSP data.

For today, the trader gave a forecast range of P50 to P50.25, while Mr. Ricafort expects the local unit to move within P50.10 to P50.30 per dollar. — LWTN with Reuters

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