Peso nears all-time low anew as BOP deficit widens

The Philippine peso weakened against the US dollar on Wednesday, dragged by the release of weak economic data on the country’s payments position.

The local currency lost 19.5 centavos to close at P58.945:$1, nearing the all-time low of P59:$1 hit earlier this month. This compares with Tuesday’s finish of P58.75:$1.

Wednesday’s depreciation comes after the Bangko Sentral ng Pilipinas (BSP) reported that the balance of payments (BOP) posted a deficit for the sixth straight month in September.

“The US dollar/peso exchange rate higher today… after the latest BOP deficit data at the widest in four years amid record net imports/trade deficit recently, some foreign payments by national government, and some foreign exchange operations by the BSP,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said in a mobile message.

The September deficit stood at $2.339 billion, wider than the $572 million deficit in August and the $412-million deficit in September 2021.

The central bank attributed this to the foreign exchange operations of the BSP,  and the payment of the government’s foreign currency debt obligations.

“The US dollar also higher vs. major global currencies after latest hawkish signals from Minneapolis Fed President Neel Kashkari, who signaled that the Fed cannot pause its campaign of monetary policy tightening,” Ricafort said.

Locally, BSP Governor Felipe Medalla said that the Philippines will have to respond to rate hikes in the US, but would not necessarily be locked in step depending on the data.

The Monetary Board of the BSP is next scheduled to meet regarding policy on November 17, 2022.

“Nevertheless, the peso exchange rate remains relatively stable for the fourth straight week already at below the P59.00 psychological mark after President Marcos signaled that the government may have to defend the peso in the coming months,” Ricafort said.—LDF, GMA News