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THE peso
breached the P43 level to close at P44.135 per dollar on
Friday as investors continued to shun the local currency
on concerns about inflation, currency traders said.
The rise
in food and fuel prices drove the country’s inflation
rate to 9.6 percent May, its highest in nine years. This
prompted the central bank to raise its interest rates by
25 basis points as a preemptive move against soaring
prices.
The
decision pushed the rate at which the Bangko Sentral ng
Pilipinas borrows from and lends to banks to 5.25
percent and 7.25 percent, respectively.
Currency
traders said the move to raise key interest rates failed
to ease the pressure against the peso since the economy
remains gripped by record oil prices.
“There
is still fear in the currency market [and] the trading
reflects it. Foreign investors are shying away from the
peso because of high inflation, which is rooted in high
oil and commodity prices,” a trader from a universal
bank said.
Another
trader said, however, that the market is expecting “some
relief” as remittances cooped up during the weekend may
rush in.
“Although remittances are not as strong as expected, we
can still expect a fair volume coming in during the
weekend,” the trader said.
However,
the market expects the peso to remain weak in the months
to come as inflation is still expected to rise.
Inflation, which climbed to 4.9 percent in January,
moved up to 5.4 percent in February, 6.4 percent in
March and 8.3 percent in April.
“The
market is still bracing for a weaker peso so long as
inflationary pressures remain,” the trader said.
The
local currency opened at P44.19. It reached a high of
P44.10 and a low of P44.20. Total volume reached $584.50
million from $404 million on Thursday. |
