MANILA, Philippines – The Philippine peso breached the P47 to $1 level Tuesday, September 8, on expectations of an interest rate hike by the US Federal Reserve.
The peso opened at P47 to $1 during Tuesday’s trading and hit an intraday low of P47.04 to $1 – the lowest in more than 5 years or since the peso closed at P47.10 to $1 on May 25, 2010.
The local currency shed one centavo to close at P46.93 to $1 from P46.92 to $1 on September 7. Volume reached $623.6 million from Monday’s $569.3 million.
Depreciation
The weakening of the currency is not unique to the Philippines as currencies in the region continued to depreciate against the US dollar, Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said.
“This episode is one of the expected outcomes of the continuing uncertainty and volatilities in the global financial markets. Globalization and interdependencies quickly propagate spill over effects, especially from the big and important economies,” he said.
But Guinigundo said the country’s sound macroeconomic fundamentals would help the Philippines withstand the external shocks brought about by the weakening global economy, the economic slowdown in China, and the impending interest rate hike by the US Federal Reserve, among others.
“We are now more risk-conscious, we continue to simulate various scenarios and stress test them regularly,” he added.
For his part, Bank of the Philippine Islands (BPI) research officer Nicholas Antonio Mapa said investors continued to seek safe haven because of the impending the US interest rate hike.
“The dollar continues to run roughshod in the region with investors still seeking safe haven with US dollar and Japanese yen stronger while Asian's weaker. Same story as risk off sentiment pervades,” Mapa said. –Rappler.com
US dollar image andPH peso image via Shutterstock