MANILA, Philippines - The peso retreated yesterday, closing at its lowest in more than a two years following the US Federal Reserve’s signal of support to wind down its bond buying program.
The local unit weakened yesterday to 44.17 to a dollar from 43.64 to $1 last Friday.
This was the peso’s lowest close since settling at 44.21 to $1 last Feb. 1, 2011.
Peso trading was closed on Monday and Tuesday due to the monsoon rains that battered Metro Manila, and on Wednesday when the country commemorated Senator Ninoy Aquino’s death anniversary.
Analysts said the recent Fed hint on cutting back stimulus caused the peso to weaken against the dollar.
“Basically, it was affected by the FOMC (Federal Open Market Committee) minutes last night in which the members agreed to tapering stimulus,†a trader said in a phone interview.
Recent Fed minutes suggested support for cutting stimulus to the US economy, prompting sell-offs in Asian markets yesterday morning.
At the same time, another trader said regional factors have contributed to the peso’s decline, mirroring other Asian currencies.
“It followed a regional trend due to what’s happening in Indonesia and Thailand,†the trader said in a separate phone interview.
Asian markets were also affected by Indonesia’s worsening current account deficit and the contraction of Thailand’s economy in the second quarter.
Dollars traded on Thursday totaled $1.140 billion, higher than the $910.600 million traded the previous day.
The peso is seen trading within the 44 to 44.30 per dollar band today.