MANILA, Philippines (Updated 4:43 p.m.) — The Philippine peso fell a hair’s breadth from the 57-level to post a new all-time low amid a rallying US dollar.
The local unit closed at P56.999 against the greenback on Monday, surpassing the previous record-low of P56.77 posted on Friday last week.
At one point during the trading day, the peso touched the P57-per-dollar level, the first time that the local currency sank to that territory based on a dataset that dates back to 2001.
A depreciating peso is becoming a big headache for the Philippines, which is already reeling from imported inflation as the ongoing war in Ukraine pushes up global energy prices.
So far, the dollar’s bullish run has been fueled by the US Federal Reserve’s aggressive rate hikes that are meant to cool down red-hot inflation stateside.
Meanwhile, there’s a robust demand for dollars at home as economic recovery from the pandemic pushes up imports.
The peso’s continued slump could add pressure to the BSP to keep up its hawkish stance to arrest the currency’s crash.
"The peso followed the movement of major currencies against the US dollar, which hit another high today," Domini Velasquez, chief economist at China Banking Corp., said in a commentary.
"The strength of the US economy and a hawkish Fed trying to slow inflation even at the brink of inducing a recession continues to dominate the movement in currencies globally. Even at this exchange rate, we see the peso possibly falling further especially if the US Fed hikes by another 75 bps in its September meeting and if the Fed increases its terminal target rate, currently at 3.5%," she added — Ian Nicolas Cigaral with Ramon Royandoyan