Peso weakens to historic low of P59.13 to the dollar

MANILA, October 29 ------ The Philippine peso weakened further and hit a historic low of P59.13 to the US dollar at the close of Tuesday's trading. The peso, which earlier fell to a record intraday low of P59.2 to the greenback, has been described as one of the worst performers in Southeast Asia this month. The last time it tested the P59-to-the-dollar level was on December 19 last year. The Bangko Sentral ng Pilipinas (BSP) meanwhile, said the recent corruption scandals may have been a factor in the weakening of the peso. "The recent peso depreciation may reflect market concerns over a potential moderation in economic growth due in part to the infra spending controversy, as well as expectations of additional monetary policy easing by the BSP," the central bank said in a statement.

Some analysts expect the BSP to implement another rate cut before the end of the year, amid slow inflation and slowing economic growth. The central bank doesn't intervene in the currency market to prevent day-to-day volatility but to dampen inflationary swings in the exchange rate over time. "The peso continues to be supported by resilient remittance inflows, still relatively fast economic growth, low inflation, and ongoing structural reforms," the BSP said. "Foreign exchange inflows from business process outsourcing, tourism, and overseas Filipino workers continue to buffer external shocks," it added.

The peso's depreciation has a significant impact on many sectors. While families of OFWs will stand to benefit from being able to get more pesos per dollar remitted, imports may also become more expensive. Fossil fuels are bought using dollars. A weaker peso also means that paying the country's foreign debts becomes more expensive. Earlier this year, the Bureau of Treasury reported that the country's foreign debt had actually declined as the peso strengthened to around 55 to 56 to the dollar. The ongoing depreciation of the local currency can end up increasing the peso value of the foreign debt.

CORRUPTION

Akbayan Party List Representative Percival Cendaña sees a possible link between weaker Philippine peso and the corruption controversy in the government’s flood control projects. “Sa isang panahon kung saan mataas ‘yung distrust, mataas ‘yung nakikita na usapin ng corruption, hindi tayo nasa-surprise na may ganitong epekto. Corruption is an economic issue, at nararamdaman natin siya ngayon,” Cendaña added.

Source: news.abs-cbn.com