Peso slumps back to record-low P59:$1

The Philippine peso depreciated against its US counterpart for the fifth straight trading day on Thursday to sink back to the P59:$1 level, matching the record-low last recorded three weeks ago.

The local currency shed a centavo to close at P59:$1 from Wednesday’s finish of P58.99:$1. This matches the record-low established in October 2022, which was also last seen on November 26.

The peso has been trading at P58:$1 for most of December, with Thursday’s depreciation following the announcement of another 25-basis-point rate cut by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP).

“The US dollar/peso exchange rate was slightly higher… after the latest -0.25 local policy rate cut and slightly higher inflation estimate for 2025,” Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said in a commentary.

The central bank now expects inflation to average 3.2% this year, higher than the 3.1% outlook reported in October, to take into account weather disturbances in the past two months.

Ricafort also attributed Thursday’s depreciation to the release of data on the country’s payments position in November, with the balance of payments (BOP) recording a $2.276-billion deficit, the widest in over two years since September 2022’s $2.338-billion deficit.

He also cited the decline in the local equities market, as the Philippine Stock Exchange index (PSEi) lost 73.48 points or 1.14% to 6,395.60, the weakest in 5.5 months or since July 2, 2024.

Sought for comment on the recent performance of the peso, BSP governor Eli Remolona Jr. said that while the central bank does not have a target level for the exchange rate, it is still monitoring the passthrough effect.

“At some point, if the peso keeps depreciating, it begins to have an effect on inflation. For now the effect has been modest. It hasn’t been in our discussions,” he said Thursday. — RSJ, GMA Integrated News