THE peso plunged to a new record low of P63.09 against the greenback on Monday as the dollar strengthened against major currencies due to geopolitical uncertainties.
The local currency weakened by ten and a half centavos to P63.06 from Friday’s P62.985:$1. This is the weakest close since Oct. 15’s P63.06:$1.
The peso opened at P62.98 and traded between P62.98 and P63.17:$1. The volume reached P1.778 billion, higher than the previous P1.598 billion.
Philippine Institute for Development Studies (PIDS) senior fellow John Paolo Rivera said the recent weakness reflects a “persistent dollar strength, elevated oil prices, geopolitical uncertainty, and increased demand for foreign currency.”
Rivera argued that the widening balance of payments (BOP) deficit and cautious investor sentiment further amplified these pressures on the local currency.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s BOP deficit widened in September, with the shortfall hitting $3.14 billion, markedly higher than the $596-million deficit recorded a month earlier and a reversal from last year’s $82-million surplus.
Rivera said that depreciation could “continue while these conditions persist, although some stabilization is possible if oil prices ease and global financial conditions improve.”
“Greater concern is not another record low itself but prolonged depreciation that translates into higher inflation and weaker household purchasing power,” Rivera said.
Chinabank economist Domini Velasquez said that while this is the weakest close, the peso was “broadly stable despite renewed US dollar strength.”
Velasquez noted that the peso-dollar exchange rate had previously reached an intraday low of P63.23:$1.
“The dollar strengthened against the yen, pound, and euro, with the two also pressured by domestic concerns,” Velasquez said.
“The peso’s relative stability suggests that recent weakness has been driven more by broad dollar strength and external factors than by domestic sentiment,” she added.
“It is worth noting that the peso exchange rate was relatively stable versus the US dollar recently amid possible intervention of market volatility above 63.00 levels,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said in a Viber message.
He said possible future BSP rate hikes “to somewhat help stabilize the peso exchange rate, importation costs, and, in turn, also better manage inflation and inflation expectations,” Ricafort said.
He said for today’s trading, the US dollar/peso exchange rate could range at 63.00-63.20 levels.
