Peso weakens back to P57:$1 level after BSP rate cut

The Philippine peso depreciated back to the P57:$1 level on Friday, a day after the Bangko Sentral ng Pilipinas (BSP) slashed policy rates for the first time in nearly four years.

The local currency shed 34.5 centavos to close at P57.245:$1 from Thursday’s finish of P56.9:$1.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said peso’s depreciation “came a day after the -0.25 [percent] cut in local policy rates to 6.25%.”

On Thursday, the BSP’s Monetary Board slashed policy rates by 25 basis points, bringing the target reverse repurchase (RRP) rate to 6.2%, the overnight deposit rate to 5.75%, and the overnight lending facility rate to 6.75%.

This is the first adjustment since the 25-basis point off-cycle hike in October 2023, and the first cut since the 25-basis point reduction in November 2020.

Security Bank chief economist Robert Dan Roces, for his part, said that “the US dollar gained overnight with US retail sales and jobs data surprisingly printing stronger than estimates.”

This was echoed by Ricafort, saying the greenback gained footing against other global currencies “after better-than-expected US retail sales and jobless claims data that could reduce the risk of recession.”

A report from the US Census Bureau showed that retail sales in America rose 1% in July to $709.7 billion, from $702.9 billion in June.

The US Department of Labor, meanwhile, reported that jobless claims or those applying for unemployment benefits declined to 227,000 in the week ending August 10, from the prior week’s 234,000.

“Going forward, the performance of the US dollar/peso exchange rate would be partly a function of intervention/defense as consistently seen over the past two years,” Ricafort said. — RSJ, GMA Integrated News