The Philippine peso depreciated to its weakest level in four years, hitting P54 to $1. This was due to the weakening trade, rising oil prices and the continuing war in Ukraine.
The Philippine peso breached the P54 to $1 mark yesterday reaching its weakest level in four years.
Data from the Bankers’ Association of the Philippines (BAP) showed that the peso traded at a low of P53.8 to a dollar during the day and a high of P54.105 to a dollar. The peso closed the day’s trade at P54.065 against the greenback, with a traded volume of $1.016 billion on Monday, the Business Mirror reported..
The last time that the peso breached the P54 territory was in October 2018.
Monday’s peso close was 31.5 centavos weaker than the previous trading day’s close of P53.75 to a dollar, with a total traded volume of $962.5 million.
ING Bank economist Nicholas Antonio Mapa said the peso weakened on Monday on the general strong sentiment for the dollar, as driven by the rapid rate hikes by the US Federal Reserve.
“Perceived policy dissonance also causing the PHP weakness as BSP retains a relatively dovish outlook vs the aggressive tightening by the Fed,” Mapa said.
Widening trade deficit
“PHP is also weaker due to widening trade deficit, owing to expensive global commodity prices and increased demand due to domestic economic reopening,” he added.
Earlier this year, the weakening of the peso against the dollar was flagged to contribute to the rising inflation rate in the country, particularly seen in imported commodities.
In May this year, economists at the Bank of the Philippine Islands (BPI) said the peso is expected to weaken further in the coming months considering the surge in import demand.
“A more significant risk to the country’s economic prospects is inflation and the depreciation of the peso, which will increase the cost of oil that the country imports from abroad on top of the increase brought by the conflict in Ukraine,” the bank said.
“The impact of peso depreciation on inflation is probably more substantial right now compared to previous years since the country is becoming more reliant on food imports, specifically pork and rice,” it added.
Tags: #depreciatingpeso, #lowestsince2018, #weakeningtrade