Peso sinks to fresh low on geopolitical tensions, Fed

MANILA, Philippines — The Philippine peso further weakened on Friday, falling to a fresh trough amid geopolitical concerns and after the US Federal Reserve suggested that another rate hike was on the way soon.

The local currency closed at P52.70 against the greenback, 15 centavos weaker than the P52.55 finish on Thursday.

Friday’s closing was the peso’s lowest level in nearly 12 years since July 19, 2006, when it closed at P52.745.

“A lot of movement this week actually were from external sources. Geopolitical concerns and the US Fed monetary normalisation were front and center,” UnionBank of the Philippines chief economist Ruben Carlo Asuncion said.

US President Donald Trump has canceled the planned June 12 summit with North Korea's Kim Jong Un Thursday, citing the "tremendous anger and open hostility" in a recent statement from the North.

Trump also said the US military is "ready if necessary" to respond to "foolish or reckless acts" by Pyongyang.

Meanwhile, the minutes of the US Fed's May 1-2 meeting released Wednesday showed that officials were generally upbeat about the prospects for the economy and said that the next rate hike would "likely soon be appropriate." Many economists expect that hike to happen at the next meeting in mid-June.

Philippine policymakers last month said they expect the local unit to trade at a range of P50 to P53 against the dollar this year until 2022 amid the normalization path taken by the US Federal Reserve.— With the Associated Press