The peso fell to a new near eight-year low against the US dollar and ended at a whisker below the psychological 50-1 level on Thursday.

The peso hit a high of P50 against the greenback in morning trade at the Philippine Dealing System before closing at P49.98. On Wednesday, the peso closed at P49.86. Volume rose slightly to $437.60 million from the previous day’s $360.50 million.

The peso hit P49.984 against the dollar on November 22, 2008. If the peso ends at P50 to the dollar, it will be the first time since October 17, 2006 that the currency hit this level.

In a statement, Finance Secretary Carlos Dominguez III said this “is an expected reaction of the local currency to the anticipated early rate increase by the US Federal Reserve, with other Asian currencies also moving in the same direction.”

"We are watching the currency movements very closely. We seem to be moving in the same direction as the other currencies. We just want to avoid abrupt changes in the exchange rates," Dominguez said.

The US Federal Reserve said it will raise its policy rates soon and currencies in Asia have been retreating due to this comment.

Central bank governor Amando Tetangco said Wednesday that if it sees “movements that are excessive, we will not hesitate to participate in the market to keep volatility in check.”

Finance Undersecretary Gil Beltran said the strengthening of the greenback against the peso “is expected as an impact of the Fed normalization.”

“The peso is just normalizing. It was P57 per the US dollar in 2004. All other currencies are moving in the same direction,” he said.

Stocks gained slightly. The Philippine Stock Exchange index went up by 36.67 points to 6,873.31 points. The broader market saw 113 advancers and 65 declines, with 47 issues steady.

Foreign buying of stocks was at P2.8 billion while foreign selling was at P3.75 billion. DMS