Peso Weakens After Fed Rate Hike Amid Fuel Price Increase Expectations

The Philippine peso weakened against the US dollar on Friday, ending its three-day streak of appreciation. The local currency lost 1.9 centavos to close at ₱62.749 against the dollar.

This decline coincided with losses in the local stock market, where the Philippine Stock Exchange index dropped by 102.73 points, or 1.72%, to close at 5,855.91. The broader All Shares index fell by 40.31 points, or 1.21%, to 3,277.80.

RCBC chief economist Michael Ricafort attributed the peso's decline to the US Federal Reserve's decision to raise interest rates by 25 basis points, its first rate increase in three years. Ricafort also noted that US Treasury yields remained near their highest levels since 2007, making dollar-denominated assets more attractive to investors.

The fuel price hike expectations further contributed to market sentiment remaining cautious, according to Regina Capital Development Corp.'s head of sales Luis Limlingan. Industry sources predict gasoline prices may rise by ₱4.50 to ₱5 per liter next week, while diesel prices could increase by ₱10 to ₱10.50 per liter.