Peso sinks to all-time low of P59.13 vs. dollar

Manila, Philippines – The peso sank to an all-time low of P59.13 against the dollar on Tuesday (Oct. 28), a depreciation the central bank attributed to lingering concerns the corruption scandal would cloud economic prospects.

Tuesday marked the local currency’s worst day by far, trumping an earlier record low of P59 against the greenback in December last year.

Before Tuesday’s worst showing, the peso had been hitting multi-month lows since September when a congressional probe unraveled irregularities in the handling of public works funds. Foreign exchange traders earlier warned of dollar outflows amid fears that graft already spilled beyond public works, while stock analysts fret over capital flight.

The central bank during midday trade said it “allows the exchange rate to be determined by market forces.”

The monetary authority provided guidance on the timing of its intervention.

“When we do participate in the market, it is largely to dampen inflationary swings in the exchange rate over time rather than to prevent day-to-day volatility,” the Bangko Sentral ng Pilipinas (BSP) said in a statement.

“The recent peso depreciation may reflect market concerns over a potential moderation in economic growth due in part to the infra spending controversy, as well as expectations of additional monetary policy easing by the BSP,” it added.

Still, “resilient” remittance inflows, combined with “relatively fast economic growth, low inflation, and ongoing structural reforms,” should lift the local currency, the central bank said.

Apart from remittances, dollar inflows from the business process outsourcing and tourism industries should provide a buffer against external shocks, it said.