P57.43:$1 is Philippine peso's new record low vs. US dollar

The Philippine peso plunged to a new record low against the US dollar on Friday amid expectations of more aggressive monetary policy tightening by the US Federal Reserve to tame inflation in the world’s largest economy.

The local currency lost 27 centavos to close at P57.43:$1 from Thursday’s finish of P57.16:$1.

This is the sixth time that the Philippine currency nosedived to its all-time weakest.

Friday’s finish surpassed the previous all-time low of P57.18:$1 recorded on September 8, 2022 —the peso’s fifth straight day of sinking to fresh record-lows. 

Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the peso’s plunge to “expectations of a large 0.75-1.00 Fed rate hike on September 21, 2022 that favors the US dollar in terms of higher interest rate earnings” after the US consumer price index rose 8.3% in August.

Ricafort said expectations of higher interest rates in the US led to a stronger dollar against global, Asian, and Southeast Asian currencies.

Security Bank chief economist Robert Dan Roces said that dollar demand also contributed to the weakening of the peso “with the start of the import season.“

ING Bank senior economist Nicholas Mapa, likewise, said that “financial market outflows are expected to continue to exit as the Fed hikes aggressively…”

“The peso also weakened amid some POGO-related policy uncertainties, especially those allegedly involved in illegal activities may have also added to some market concerns as this could reduce POGO revenues and also reduce other business/economic activities in the country,” Ricafort said.

Finance Secretary Benjamin Diokno, on Thursday, said the country should do away with Philippine Offshore Gaming Operators (POGOs), citing what he described as social and reputational risks.

Diokno said the Philippines can move forward without the industry as it has already seen a decline in revenue generation as revenues from the industry were estimated at P3.9 billion in 2021, versus the P7.2 billion recorded in the previous year.

Since the start of 2022, the Philippine peso has weakened against the greenback by P6.411 or 12.6% from the P50.999:$1 as of end-2021. —NB, GMA News