Metro Manila, September 21 ------ The Philippine peso plunged to a new record low against the dollar, as the greenback continues gaining ground amid expectations of another major US Federal Reserve interest rate hike.
Bankers Association of the Philippine figures show the local currency ended trading at P57.48, breaching the all-time low of P57.43. The latest close was below the recent P57.40. The peso weakened to as low as P57.50 within the day, while P57.355 was its best value. "That's mostly on positioning ahead of the Fed and BSP (Bangko Sentral ng Pilipinas) meetings, as well as risk off undertones with several central banks meeting this week," Security Bank chief economist Dan Roces said in a message to reporters. Both the Fed and the BSP will announce rate-setting actions this week. "It looks like the fx (foreign exchange) market is pricing only a 50 bps (basis points) RRP (reverse repurchase) rate hike from the BSP on September 22 vs the expected 75 bps Fed funds rate hike. Market is probably anticipating that we will hit P58 unless the BSP-MB surprises with a bigger hike on September 22," BPI lead economist Jun Neri told reporters. Neri said the peso's fresh record low close again "marked an underperformance" versus its Asian peers. Among the factors he cited was the country's wider-than-expected current account, a view shared by Roces.
The peso also weakened on top of balance of payments deficit widening to $5.49 billion as of end-August, compared to $253 million the same period last year, explained RCBC chief economist Michael Ricafort in an email to reporters. This "may be largely brought about by the significantly wider trade deficits as imports have been bloated by elevated global commodity prices earlier this year largely attributed to the Russia-Ukraine war," Ricafort said, also citing the pick-up in imports with the domestic economic reopening. The peso has depreciated by 12.7% or P6.481 since the start of 2022, added Ricafort.
Source: cnnphilippines.com