Peso sinks to new 12-year low

The Philippine peso softened for the second consecutive trading day on Tuesday to carve a news 12-year low as trade tensions between China and the United States continued to intensify.

The local currency depreciated by 8 centavos to P54.31:$1 on Tuesday, now the weakest in over 12 years since the pair closed at P54.425:$1 on Nov. 22, 2005.

On Monday, the peso closed at P54.23:$1, the previous 12-year low since the close of P54.30:$1 on November 24, 2005.

Trade tensions between the world’s top economies continued to influence the currency market, said Michael Ricafort, economist at Rizal Commercial Banking Corp.

“The US dollar went up vs. other major emerging market currencies, including the peso, after higher tariffs were imposed by the US on an additional $200 billion of Chinese imports (to a total of $250 billion) and China retaliated with higher tariffs on US imports by another $60 billion (to a total of $110 billion),” Ricafort noted in a text message.

According to a report by Reuters, both countries imposed the new round of tariffs on Monday, intensifying the dispute that is expected to hit global economic growth.

“US dollar also higher vs. major global currencies before the widely expected +0.25-Fed rate hike on September 26,” Ricafort said.

The Federal Open Market Committee is scheduled to meet on September 25 and 26 to discuss if conditions warrant a change in monetary policy settings.

The Bangko Sentral ng Pilipinas is also holding a policy meeting on Thursday, September 27. —VDS, GMA News