Peso hits new record low of 62.40:$1

MANILA, Philippines — The peso weakened to another record low yesterday, closing at 62.40 against the dollar as expectations of rising treasury yields in the United States, tighter Federal Reserve policy and elevated oil prices continued to favor the greenback. Data from the Bankers Association of the Philippines showed the peso depreciated by 13.5 centavos from its previous record-low close of 62.265 per dollar on Aug. 28, the last trading session. The local currency opened at 62.25, which was also its strongest level of the day, before weakening to as much as 62.40. It ended the session at its weakest intraday level, setting both a new closing and intraday record low. Total trading volume stood at $1.31 billion. UnionBank chief economist Ruben Carlo Asuncion said the peso’s continued depreciation was being driven mainly by developments overseas, particularly a stronger dollar and higher global borrowing costs. “The peso’s depreciation to a fresh record low reflects a stronger dollar environment driven by rising US Treasury yields, growing expectations of a Federal Reserve rate hike and higher oil prices amid escalating geopolitical tensions in the Middle East,” Asuncion said. He said these developments have encouraged investors to move toward dollar-denominated assets while intensifying concerns over inflation and import costs for oil-dependent economies such as the Philippines. RCBC chief economist Michael Ricafort said that the 10-year US Treasury yield had climbed to around 4.78 percent, among its highest levels in more than a year, increasing the appeal of dollar-denominated assets. Ricafort also cited Federal Reserve Chair Kevin Warsh’s warning that US inflation had yet to slow meaningfully, reinforcing expectations that US monetary policy could remain tight. Looking ahead, Asuncion said the peso could remain under pressure as investors await US economic data and further clues on the Federal Reserve’s policy direction. “Sustained strength in the dollar, elevated global yields and higher energy prices could keep the currency on the defensive,” he said. Still, Asuncion said dollar inflows from overseas Filipino remittances, business process outsourcing revenues, tourism receipts and foreign investments could help cushion the peso against excessive swings. “Overall, global factors are likely to remain the primary drivers of the peso’s movement in the coming months,” he added.