By Eileen A. Mencias

THE peso sank to 49.05 yesterday as profit-taking, the strong dollar, and investor aversion to emerging-market currencies brought it to its lowest level against the dollar since December, analysts said.

The unit closed at 48.80 on Friday, but yesterday it opened at 48.90 and hit a low of 49.145 before closing at 49.05 on a volume turnover of $740.5 million, down from $943.49 on Friday.

The peso slid even as the central bank estimated that inflation ranged between 6.6 and 7.5 percent in February from 7.1 percent the month before.

?Increases in water rates, price increases of certain food items and gasoline, as well as a moderate peso depreciation could cause the final February inflation to fall within the higher end of this range,? Bangko Sentral Governor Amando Tetangco said in a text message to reporters.

?The series of rollbacks in local diesel prices and fare reductions, as well as lower international oil prices, on the other hand, could cause a month-on-month decline in inflation.?

An analyst blamed profit-taking and the continuing investor ?de-leveraging? for the peso?s decline.

?Lower corporate earnings will translate to increased risk aversion as the recession accelerates. It?s also the natural tendency of the market to take profit,? said Marcelo Ayes, vice president of Rizal Commercial Banking Corp.

?While many bought at 47, selling at 49 already ensures profit even if the weakness of the peso is expected to persist until the first half of the year.?

A trader from a foreign bank said the peso was moving in tandem with other falling regional currencies, and expectations of another interest rate cut by the central bank on Thursday could add pressure to it.

But the real pressure on the unit would come from overseas, the trader said.

?When you see Citi seeking money and AIG asking the Fed for more, risk aversion increases. What more with emerging markets?? the trader said.

In its outlook for this week, Bank of the Philippine Islands said investors were wary of emerging-market currencies.

It said the US dollar was steady against the other major currencies but advancing against Asian units, and in particular the yen because of the weak Japanese economy.

Metropolitan Bank and Trust Co. said the peso would average 49 in the first quarter and hit 53 by the end of this year if risk aversion persisted.

?The peso is expected to weaken further in 2009 on the back of a slowdown in export earnings and remittances and the bleak investment outlook,? the bank said.

?However, early signs of a recovery in the global economy toward the end of the year could prop up the peso in the second half.?