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Peso weakens versus the dollar ahead of US Federal Reserve’s decision

THE PESO retreated versus the greenback on Wednesday ahead of the policy decision of the US Federal Reserve and due to a sharp increase in oil prices.

The local unit closed at P50.27 per dollar on Wednesday, shedding 13 centavos from its Wednesday finish of P50.14, based on data from the Bankers Association of the Philippines.

The peso opened Wednesday’s session at P50.18 versus the dollar. Its weakest showing was at P50.30, while its intraday best was at P50.08 against the greenback.

Dollars exchanged rose to $1.239 billion on Wednesday from $998 million on Tuesday.

A trader said the peso weakened due to “hawkish expectations” ahead of the Fed’s policy decision.

The Federal Open Market Committee held its policy review from Tuesday to Wednesday and its decision was expected to be released overnight.

Investors want to see if the Fed’s policy statement will give clearer guidance regarding the timing of its plan to reduce its bond purchases.

Meanwhile, Rizal Commercial Banking Corp. Michael L. Ricafort said higher oil prices also affected peso-dollar trading.

Reuters reported that oil prices jumped by more than $1 per barrel on Wednesday following data showing crude stocks dropped more than expected last week due to the impact of the two hurricanes.

US West Texas Intermediate crude futures inched up $1.08 or 1.5% to $71.57 a barrel by 0643 GMT on Wednesday. Meanwhile, Brent crude futures climbed $1.03 or 1.4% to $75.39 per barrel.

For Thursday, the trader gave a forecast range of P50.15 to P50.40, while Mr. Ricafort expects the local unit to move from P50.15 to P50.35 per dollar. — LWTN with Reuters

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