Metro Manila (CNN Philippines, July 9) — The Philippine peso returned to the 50 to the dollar level on Friday — its weakest performance against the greenback in more than a year.
The local currency finished at ₱50.08 from Thursday’s ₱49.875 — the worst turnout since June 23, 2020, when it closed at ₱50.19 against the dollar.
This came “amid the stronger US dollar worldwide to among 3-month highs, as well as the stronger US dollar (versus) major ASEAN currencies,” RCBC chief economist Michael Ricafort told CNN Philippines. He also cited specifically the hawkish signals sent by the US Federal Reserve over three weeks ago.
CNN Business reported last month that the American central bank expects to raise interest rates in 2023 – viewed as a hawkish and earlier than usual move by market watchers.
Ricafort also mentioned that the recent increase in banks’ non-performing loan ratio is “partly weighing on market sentiment.” The country’s bad loan ratio surged to its highest since September 2008 – a year marked by the global financial crisis.Peso falls back to ₱50-per-dollar level
Meanwhile, in a note to reporters, ING Bank senior economist Nicholas Mapa said the greenback’s strong performance, coupled with the “wider-than-expected” trade gap, may have aided the peso’s return to the 50 territory.
READ: Trade deficit widens in May with milder growth in exports, imports
Given the peso’s downward trend, Mapa said he expects the Bangko Sentral ng Pilipinas to keep its accommodative policy stance in a bid to help address the depreciation. But it could change tune “should the current weakness go on for a considerable period of time,” he added.
Mapa also said pressure on the peso is expected to remain in the near term as demand for imports picks up, especially if shipping bottlenecks will continue to subdue exports.
