Peso extends losses, marks record low for 5th straight trading day

The Philippine peso extended its losing streak to carve a fresh record-low for the fifth straight trading day on Thursday, following the release of dollar reserves data for the month of August.

The local currency lost 4.5 centavos to close at P57.18:$1 from Wednesday’s finish of P57.135:$1, which was the previous record-low.

The depreciation came after data released by the Bangko Sentral ng Pilipinas (BSP) showed that the gross international reserves (GIR) stood at $98.975 billion as of August, down from $99.838 billion in July.

“The peso again weaker vs. the dollar… after the latest GIR data that declined to new two-year lows,” Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort said in a mobile message.

Thursday’s close brought the peso down by P6.181 against the dollar or by 12.1% year-to-date, which Ricafort warned could lead to higher inflation and more aggressive policy tightening in the country.

Inflation clocked in at 6.3% in August, slightly slower than the 6.4% in July but still faster than the central bank’s target range of 2.0% to 4.0%.

BSP Governor Felipe Medalla already earlier signaled the possibility of more policy tightening, as food supply and petroleum prices would first have to be addressed before a pause can be considered.

“The peso also weaker after the latest hawkish signals from Fed officials, as well as the Fed Beige Book Report signaling high prices and tight labor markets weighing on US economic prospects over the next year,” Ricafort said.

He added, however, that inflation in the United States has shown signs of decelerating which could lead to a downward correction in the US dollar against major global currencies.

Officials of the Federal Reserve have maintained a hawkish stance, with Chair Jerome Powell signaling tight monetary policy “for some time” until inflation is controlled. —NB, GMA News