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Philippines: Peso slumps to new low
MANILA, Philippines — The peso slumped to a new low of 57.48 to $1 yesterday, shedding eight centavos from Monday’s 57.40, with the anticipated super-sized rate hike by the US Federal Reserve likely to be followed by a huge increase by the Bangko Sentral ng Pilipinas (BSP).
The local currency hit a record intraday low of 57.50 after strengthening slightly in the morning, when it hit an intraday high of 57.355.
Since the start of 2022, the peso has depreciated by a total of 6.481, or 12.7 percent, from 50.999 in end-2021.
Trading volume almost doubled to $967 million yesterday from $508.4 million on Monday.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the immediate support level for the peso is at the 57 to 57.25 levels and the next resistance level is between 57.50 and 57.75.
He said this is the seventh record low closing rate for the peso since the start of the year as the greenback continues to strengthen amid the widely expected Fed rate hike of between 0.75 percentage point to one percent, increasing the attractiveness of the US currency with higher interest rate income on dollar deposits/fixed income investments.
The peso also weakened after the benchmark 10-year US Treasury yield posted a new 11-year high of 3.52 percent on Sept. 19 and now at 3.51 percent, that also increases the dollar-denominated bond yields.
Ricafort said the peso was also weaker after the balance of payments (BOP) deficit data from January to August widened by more than five times compared to the same period last year.
An offsetting positive factor for the peso was that global crude oil prices among one-week lows that led to the latest large rollback in local diesel prices, by about P4.15 per liter, and could also lower the country’s oil/commodity imports.
Economists are expecting another aggressive 50-basis point hike by the Philippine central bank’s Monetary Board on Thursday.
Source: https://www.philstar.com/business/2022/09/21/2211070/peso-slumps-new-low