Peso weakens to 45:$1

MANILA, Philippines - The peso retreated to the 45 to a dollar band yesterday after the US Federal Reserve announced another cut in its asset purchases and the Bangko Sentral ng Pilipinas hinted a looming interest rate adjustment.

The local currency lost 25 centavos to close at 45.10 from its 44.85:$1 finish on Wednesday.

Yesterday’s closing rate was the weakest level after the peso closed at 45.18:$1 last Feb. 6. The peso was last seen within the 45:$1 band on Feb. 11.

The local unit’s movement was in line with other Asian currencies, majority of which weakened after the Fed slashed its monthly purchases of US Treasuries and mortgage bonds by another $10 billion to $55 billion.

The massive monthly purchases, introduced in 2008 to pump more money into the US economy, is expected to end in the second half of this year, Fed Chairman Janet Yellen said.

At the same time, the Fed decided to include the pace and progress of achie-ving its unemployment and inflation goals as guidance in keeping interest rates near zero.

The Bangko Sentral ng Pilipinas yesterday reacted to the Fed’s announcement by saying it sees “early measured adjustments” in policy as “ideal.” The BSP also noted that a gradual adjustment is seen less disruptive to the economy.

The BSP’s Monetary Board will revisit policy settings next on March 27.

The peso traded between 45.03:$1 and 45.105 to $1. Total volume traded amounted to P924.6 million, less than the P1.118 billion recorded on Wednesday.