Peso slips to weakest level in nearly 13 years

The Philippine peso depreciated against the dollar for the third consecutive trading day on Thursday, closing at its worst level in nearly 13 years.

The local currency lost 2.5 centavos to close at P53.80:$1 from 53.55 on Wednesday, its weakest in nearly 13 years since closing at P53.985:$1 on Dec. 7, 2005.

“Today’s sharp depreciation of the peso was still attributable to the stronger-than-expected local inflation report yesterday,” Guian Angelo Dumalagan, economist at the Land Bank of the Philippines, said.

Inflation clocked in at 6.4 percent in August this year, the fastest in over nine years since the 6.6 percent in March 2009.

Dumalagan noted the exchange rate was also influenced by concerns about the uncertainties surrounding global trade.

“On the global front, lingering trade uncertainties concerning the US, Canada and China as well as emerging markets’ anxieties drove strong demand for the dollar,” he said.

Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said the peso’s weakness was more about the greenback’s appreciation.

“Nagkataon, lumakas ang dollar kahapon tsaka ngayon. So even if you don’t do anything, the peso will show some depreciation,” he told reporters at the central bank headquarters in Manila.

“Ito ba, is this unique? Is this something that we should be worried about? It should concern us, but this is part of the essence of a flexible exchange rate,” Guinigundo noted.

The BSP has been consistent in saying that the peso-dollar exchange is determined by market forces, and only steps in when need arises.

“The exchange rate is flexible to accommodate these shocks in the system, including from the domestic economy. Mag-worry tayo kung ‘di gumagalaw ang peso,” Guinigundo said. —VDS, GMA News