Peso sinks to two-week low before US data

Philippine peso weakens amid global risk aversion, ahead of US inflation report

The Philippine peso weakened to a two-week low on Tuesday, August 9, tracking losses in regional currencies as investors grew more risk averse ahead of the release of key US inflation data later in the day.

The peso opened weaker at 55.74 per US dollar on Tuesday, down from 55.68 on Monday, August 8. It depreciated further to 55.81, its weakest level since July 26.

Peso pressured by global factors, ahead of US CPI data

The peso's depreciation on Tuesday was in line with the weakness seen in other Asian currencies. The Thai baht, Indonesian rupiah, and Malaysian ringgit all weakened against the US dollar.

Traders said the peso was pressured by a combination of global factors, including the ongoing trade tensions between the US and China, as well as concerns about the global economic slowdown.

The release of the US consumer price index (CPI) data for July later in the day was also seen as a key factor weighing on the peso.

Analysts expect the US CPI to show a further increase in inflation, which could prompt the Federal Reserve to raise interest rates more aggressively.

Aggressive Fed rate hikes could weigh on peso

A more aggressive Fed rate hike path could lead to a stronger US dollar and put pressure on emerging market currencies like the peso.

Traders said they were cautious ahead of the US CPI data and would closely monitor its impact on the peso.

The peso has been on a downtrend in recent months, depreciating by around 5% against the US dollar since the start of the year.

Peso expected to remain under pressure in near term

Analysts expect the peso to remain under pressure in the near term due to the global headwinds and the upcoming US CPI data.

However, they said the peso could recover some of its losses later in the year if the global economic outlook improves and the Fed adopts a less aggressive rate hike path.