MANILA, Philippines — The peso sank to a fresh near 13-year-low against the dollar on Tuesday, beating its record set just the previous day, ahead of a crucial meeting of the Bangko Sentral ng Pilipinas on Thursday.
The local currency closed 54.31 against the greenback, losing eight centavos from 54.23 close on Monday trading.
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This was the peso’s weakest finish in nearly 13 years since it closed at P54.425 against the dollar on Nov. 22, 2005.
Trading volume at the foreign exchange market was a little lower, with P668.35 billion exchanging hands versus the previous day's P670.6 billion.
The currency has weakened for the first two days this week ahead of the meeting of the BSP's Monetary Board, the central bank's policymaking body, on Thursday when it is expected to raise policy rates anew.
Policymakers have been battling soaring inflation at nearly a decade high this year, and a weak peso, which makes imports more expensive, contributes to rising prices.
The BSP has already raised interest rates by 100 basis points since May, which theoretically should attract more foreign funds to the Philippines and boost the peso's value. A new round of rate hikes on Thursday could have a similar effect.
On inflation, a BSP rate hike would mean more expensive interest charged on bank loans, making them unattractive to consumers wanting to borrow. The intended effect is to reduce bank credit in the system to limit demand on goods and keep their prices in check.
Analysts have pegged at least an increase of at least 25 basis points on BSP's policy rate, currently standing at 4 percent, on Thursday.