Peso weakens further at P53.27 to a dollar

The Philippine peso weakened further beyond the P53:$1 level on Thursday, marking a fresh low in nearly 12 years.

The local currency lost 4 centavos to close at P53.27 from P53.23:$1 on Wednesday, its weakest in nearly 12 years since closing at P53.55:$1 on June 29, 2006.

“I think the peso depreciation in recent days was brought about by a confluence of external and domestic factors,” Angelo Taningco, economist at Security Bank Corp., said.

“Externally, the Fed’s latest rate hike and its steeper rate hike path coupled with risk-off sentiment in certain emerging markets have likely contributed to the peso depreciation” he said.

During its policy meeting on June 12 and 13, the Board of Governors of the Federal Reserve System voted unanimously to raise interest rates on the required and excess reserve balances to 1.95 percent starting June 14.

BDO Capital and Investment Corp. president Ed Francisco noted that dollar-denominated assets have become more appealing.

“With Fed raising, then US dollar assets get more attractive and really hurts others, including us,” he said.

On the local front, Taningco also cited weak economic data as a negative factor against the peso.

“Domestically, rising inflation, widening trade and BOP (balance of payment) deficits, and a drop in foreign reserves likewise exerted depreciation pressures on the peso,” he said.

Inflation accelerated by 4.6 percent in May, the fastest in at least five years.

The statistics officer also reported that the trade deficit widened by more than 130 percent in April. —VDS, GMA News