Peso weakens as market sees June BSP cut

THE PESO depreciated against the dollar on Wednesday amid expectations of another rate cut by the Bangko Sentral ng Pilipinas (BSP) next month.

The local unit closed at P55.855 per dollar on Wednesday, weakening by six centavos from its P55.795 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session stronger at P55.75 against the dollar. It dropped to as low as P55.95, while its intraday best was at P55.63 versus the greenback.

Dollars exchanged increased to $1.92 billion on Wednesday from $1.89 billion on Tuesday.

“The peso weakened amid growing expectations of a potential BSP rate cut in June,” a trader said in an e-mail.

BSP Governor Eli M. Remolona, Jr. told Bloomberg last week that the central bank could cut borrowing costs by 75 basis points (bps) more this year as inflation continues to slow.

Last month, the Monetary Board slashed benchmark rates by 25 bps to bring the policy rate to 5.5%. Its next meeting is on June 19.

The peso dropped even as the US dollar was generally weaker against Asian currencies on Wednesday amid higher global crude oil prices and easing expectations of a recession after the US and China agreed to cut tariffs for 90 days, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Thursday, the trader said the peso could recover “as the likely contraction in US retail sales report might support further depreciation of the greenback.”

The trader expects the peso to move between P55.70 and P55.95 per dollar on Thursday, while Mr. Ricafort sees it ranging from P55.75 to P55.95. — A.M.C. Sy