Phil peso drops
Time to remit? Image Credit: Gulf News

Dubai: UAE expats looking to remit more Philippine pesos back home will be benefitted from favourable rates on Wednesday, and even more so with the currency expected to stay weak in the days to come.

Against the UAE dirham, the Philippine peso was at 15.09, while the currency was at 55.88 versus the US dollar. Check the latest forex rates here.

The peso started the week on a negative note, weakening 0.3 per cent after firming 1.5 per cent the prior week as expectations of a rate hike on August 18 supported the currency that has lost more than 8 per cent in the first seven months of the year.

The Bangko Sentral ng Pilipinas (BSP) is widely expected to continue with its monetary tightening after an outsized 75 basis point (bps) hike in mid-July, although a similar big move is not expected later this week.

BSP is expected to follow its July surprise rate hike with a half-point rise on Thursday and another quarter-point hike next month to catch up with its peers in containing soaring inflation, a Reuters poll showed.

Peso bills PHP peso dollar
The peso started the week on a negative note, weakening 0.3 per cent after firming 1.5 per cent the prior week.

Rate hike to pressure peso

Analysts at ING, DBS, OCBC and Mizuho Bank expect a 50 bp hike to its key overnight borrowing rate to contain inflation which is hovering near four-year highs.

"Yet-to-peak and still rising headline inflation ... is likely to keep policymakers resolute in their fight to tame increasing price pressures and ensure inflation expectations are not unanchored," DBS analysts said in a note.

BSP Governor Felipe Medalla said in a forum on Wednesday the central bank was "ready to take the necessary policy actions" to combat inflation, and added that current policy settings remain supportive of economic growth.

The US dollar index, which measures the greenback against six major peers, slipped marginally ahead of the US central bank (Federal Reserve) minutes and US retail sales for July.

"Should the minutes indicate a greater shift towards a data-dependent approach with more concerns of recession risks, markets may perceive the committee to be less hawkish and US dollar could ease further," analysts at Malaysia-based Maybank wrote in a note.