The Philippine peso closed at its lowest level against the US dollar in seven years on Monday due to concerns about the direction of the US Federal Reserve in interest rates and corporate demand, according to the central bank.

The peso hit an intraday low of 48.26 against the US dollar before closing at 48.25. Volume rose to 758 million dollars from Friday’s 590 million dollars at the Philippine Dealing System.

The peso hit 48.29 to the dollar on September 14, 2009.

“The peso movement reflected the continuing uncertainty about the US Fed’s next policy, just like the other regional currencies, plus strong foreign exchange demand for fixing and corporate investments,” said central bank governor Amando Tetangco Jr in a text message to reporters.

The peso had been declining since September when the currency closed 46.552 against one US dollar.

Stocks declined in line with the peso. The Philippine Stock Exchange composite index lost 1.18 percent to 7,632.48. The mining index, which is bracing for the announcement of the audit of mining companies on Tuesday, lost 1.06 percent to 10,894.48.

Foreign sellers of stocks slightly outweighed buyers. Foreign funds sold 3.915 billion pesos of shares. Purchases of stocks by foreigners amounted to 3.89 billion pesos.

In a statement, Philippine Stock Exchange president and chief executive officer Hans Sicat said there had been net foreign selling in the past weeks "but numbers show that this has slowed down following the recent meeting of the US Federal Reserve.”

“Perhaps it is also an indication of fund managers locking in gains, as the PSEi has delivered double digit returns since the start of the year. Our economic fundamentals remain strong and this should continue to help corporate performance moving forward," said Sicat. DMS