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Peso touches 53 vs $1 ahead of Fed, ECB meetings

A worker counts US dollar bills inside a money changer in Metro Manila, Philippines. Romeo Ranoco, Reuters/File

MANILA — The peso breached the 53-level against the dollar on Wednesday, the first since mid-2006, as the greenback strengthened ahead of 2 central bank meetings.

The peso was trading at 53.079 shortly after trading resumed from the Independence Day holiday on Tuesday, Bloomberg data showed.

The US Federal Reserve is expected to raise interest rates for the second time this year at the end of its meeting on Wednesday (early Thursday in Manila). The European Central Bank will also meet later this week.

"That's really a function of the US increasing their interest rates and obviously, the imports we are getting from our infrastructure spending and I think that should continue," BPI Securities analyst Riche Lim told ANC's Market Edge.

Some foreign investors may choose to be underweight on Philippine stocks to avoid the weak peso's impact on their stock portfolios, Lim said.

"On a consumption basis, it should actually be good, for remittances, for BPOs (business process outsourcing)," he said. "On the economic side, I think we're good."

President Rodrigo Duterte is building P8 trillion in new roads, railways and airports to accelerate economic growth that is among the fastest in Asia.

Imports outpaced exports in April, bringing the trade deficit to its widest level in 4 months.

Budget Secretary Diokno had said that a weak peso would increase the value of dollar remittances from Filipinos working abroad. Trade Secretary Ramon Lopez said it would make local goods cheaper for buyers abroad.

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