The peso tumbled further to hit a new record low of 58 to $1 after weakening by 52 centavos from Tuesday's close of 57.48, according to the Bankers Association of the Philippines (BAP).

The local currency opened at an intraday high of 57.7 and steadily lost steam to close at an intraday low of 58. Trading volume went up by 8.7 percent to $1.05 billion from Tuesday's $967 million.

China Bank chief economist Domini Velasquez said the peso reached a new all-time low as markets are anticipating another giant hike by the US Federal Reserve.

Velasquez said market expectations are currently at another 75-basis-point interest rate increase by the US Fed and some are even betting on as much as 100 basis points.

She said the Bangko Sentral ng Pilipinas (BSP) is widely anticipated to deliver another 50-basis-point hike in its rate-setting meeting today.

However, Velasquez said the aggressive rate hike is unlikely to curb the depreciation momentum.

'In the local bourse, there was some foreign outflow also as investors remain defensive. As long as the Fed remains aggressive, we will likely see continued peso weakness,' Velasquez said.

The economist is hoping that remittances from overseas Filipino workers and the upcoming initial public offering (IPOs) would help support the currency.

UnionBank chief economist Ruben Carlo Asuncion said that this week is an action-packed week for the monetary policy front in many central banks all over the world, with the US Fed highly anticipated to raise interest rates by 75 to 100 basis points.

'All eyes are on the US Fed and market participants are positioning themselves ahead of what can happen post-US Fed jumbo hike, whether it's 75 or 100 basis points. Anticipation of the possible movement domestically is also adding fuel to the volatility that the forex rate is now experiencing,' Asuncion said.

ING Bank senior economist Nicholas Mapa said the peso tracked regional currencies as emerging market currencies wilted under the strong dollar.

'The BSP is on track to hike 50 basis points if Fed hikes 75 basis points, but could upsize should Fed do a 100+. Very little emerging markets foreign exchange can do in the face of a hawkish Fed,' Mapa said.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the continued strengthening of the dollar could lead to higher import prices and overall inflation, and could lead to a more aggressive local policy rate hike, especially on Sept. 22.

Ricafort noted that the local currency has already depreciated by a total P7.001 or 13.7 percent since closing at 50.999 to $1 in end-2021.

Furthermore, yesterday's level was the eight record low closing rate for the peso since the start of the year, namely 56.77 on Sept. 2, 56.999 on Sept. 5, 57 on Sept. 6, 57.135 on Sept. 7, 57.18 on Sept. 8, 57.43 on Sept. 16, and 57.48 on Sept. 20.

On Thursday, Ricafort said the peso could range 57.85 to 58.05 levels as the next resistance is seen between 58 and 58.25 to $1.

According to the economist, the immediate support level for the peso is seen at 57.50 to 57.75.

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