The Philippine peso opened the week on a negative note, as it continued to soften against its US counterpart to hit the P54:$1 level, its weakest in over three years.
The local currency closed Monday at P54.065:$1, 31.5 centavos weaker than last Friday’s finish of P53.75:$1. This is the worst performance since the peso closed at P54.08 on October 12, 2018.
Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort attributed the depreciation to the latest remarks of the Federal Reserve, indicating further rate hikes in the United States.
It is also in line with the depreciation of other major currencies in Asia and the Association of Southeast Asian Nations (ASEAN) region.
“[T]he Fed signaled determination to further bring down US inflation back to the 2% target even if that would require more aggressive Fed rate hikes that could entail risk of economic slowdown or even recession just to bring down inflation,” Ricafort said in a mobile message.
The Federal Reserve last week announced a 0.75-percentage-point rate hike, which Chair Jerome Powell said was “essential” to lower inflation moving forward.
Ricafort also noted the impact of the country’s latest external debt data at $109.7 billion as of the first quarter, bringing the external debt-to-GDP ratio at a nine-year high of 27.5%.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno last week said the latest ratio remains at manageable levels, noting that it remains among the lowest as compared with other ASEAN member countries.
Ricafort also cited the impact of the new COVID-19 cases recorded in the country, after 612 fresh cases were recorded on Sunday, June 19. This is the highest daily tally since April 3. — RSJ, GMA News