Peso weakens as strong US jobs data fuels Fed taper bets

 Peso weakens as strong US jobs data fuels Fed taper bets

THE PESO depreciated versus the greenback on Friday as better US jobs data fueled expectations that the Federal Reserve would reduce its monthly asset purchases by next month.

The local unit closed at P50.711 per dollar on Friday, depreciating by 10.6 centavos from its P50.605 finish on Thursday, data from the Bankers Association of the Philippines showed.

The peso opened Friday’s session at P50.68 per dollar. Its weakest showing was at P50.61, while its intraday best was at P50.79 versus the greenback.

Dollars traded rose to $957.74 million on Friday from $936.65 million a day earlier.

“The peso weakened today as market expectations of a November Fed taper solidified from the better-than-expected US initial jobless claims report overnight,” a trader said in an email on Friday.

US weekly jobless claims fell below 300,000 for the first time in 19 months, Reuters reported on Thursday.

The US Federal Reserve last month said it could start reducing its monthly bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected.

The local unit closed weaker versus the dollar as global oil prices lingered at seven-year highs, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Reuters reported Friday that oil prices rose amid signs of strong demand and tighter supplies as industries switch to oil in response to higher gas and coal prices.

The peso was also slightly weaker Friday due to the easing of Metro Manila lockdown levels to Alert Level 3 starting on Oct. 16, allowing more businesses to increase activity and some pick up in imports, Mr. Ricafort said.

“However, the peso nevertheless is still among the strongest in three weeks or since Sept. 24, 2021,” he said. “Offsetting positive factors for the peso include the latest gains in the local stock market at new eight-month highs, with net foreign buying of $5.4 million today, after yesterday’s $3.8 million.” — Jenina P. Ibanez