THE PESO ended flat versus the greenback on Thursday after the central bank hiked benchmark interest rates for the first time since 2018 and amid the decline in global oil prices.
The local unit closed at P52.45 per dollar on Thursday, unchanged from its Wednesday finish, Bankers Association of the Philippines data showed.
The peso opened Thursday’s session at P52.41 versus the dollar. Its weakest showing was at P52.47, while its intraday best was at P52.30 against the greenback.
Dollars exchanged increased to $1.119 billion on Thursday from $805.9 million on Wednesday.
The peso closed flat versus the dollar after the central bank raised borrowing costs from record lows.
The Bangko Sentral ng Pilipinas (BSP) fired off its first 25-basis-point rate hike in over three years on Thursday to help temper second-round effects of rising prices and inflation expectations while making sure economic recovery remains on track.
“The Monetary Board believes that a timely increase in the BSP’s policy interest rate will help arrest further second-round effects and temper the buildup in inflation expectations,” BSP Governor Benjamin E. Diokno said at an online briefing.
Eight out of 17 analysts in a BusinessWorld poll had predicted a rate hike from the BSP.
The central bank now expects inflation to average 4.6% this year from 4.3% previously, well beyond the 2-4% target. The forecast for next year was also raised to 3.9% from 3.6%.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said the market also considered the decline in global oil prices early on Thursday.
Oil prices had declined to their lowest level in nearly a week early on Thursday due to concerns on how the restrictions in China will hit demand.
However, fuel prices recovered from early losses as lingering fears over tight global supplies outweighed fears over slower economic growth, Reuters reported.
Brent crude rose by 1.2% to $110.41 per barrel, while US crude was up 0.8% to $110.48 a barrel. — L.W.T Noble with Reuters