Peso slips to new historic low, nears P59:$1

The Philippine peso is now a centavo away from the P59:$1 level, as it continued its losing streak for the fifth straight trading day on Tuesday to carve a fresh record low.

The local currency lost 49 centavos to close Tuesday at P58.99:$1 versus last Friday’s close of P58.5:$1, the previous all-time low.

This is the 11th all-time low of the peso against the greenback so far this month, following previous records on September 2 (P56.77:$1), September 5 (P56.999:$1), September 6 (P57.00:$1), September 8 (P57.18:$1), September 16 (P57.43:$1), September 20 (P57.48:$1), September 21 (P58$1), and September 22 (58.49:$1).

Year-to-date, the peso has depreciated by P7.99 or 15.7% from P50.999:$1 during the last trading day of 2021.

Tuesday’s depreciation comes as the Federal Reserve last week hiked key policy rates by 75 basis points, and has since maintained a hawkish policy stance, hinting at further rate hikes moving forward.

“Higher US interest rates or bond yields increase the attractiveness or allure of the US dollar, with high interest rate income on US currency-denominated deposits/bonds/other fixed income instruments,” Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort said in a mobile message.

“Local monetary authorities signaled possible surprise or off-cycle local policy rate hike/s, more intervention in the local foreign exchange markets; both of which could help stabilize the peso exchange rate, as well as overall inflation,” he added.

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) last week hiked policy rates by another 50 basis points, with inflation now seen to average 5.6% this year, higher than the previous forecast of 5.4%.

Ricafort said market sentiment on local financial markets also took into consideration the damage brought by Typhoon Karding (international name: Noru), which could lead to higher prices of food and agricultural products.

“The peso also weaker after the local stock market, the PSEi, declined for the fourth straight trading day,” he said.

PSEi slips to historic lows

The main PSEi lost 239.47 points or 3.83% to close at 6,020.07, its weakest in nearly two years since October 20, 2020. The broader All Shares index shed 107.06 points or 3.20% to close at 3,234.23.

“The market selloff resumed with local shares following the equity selloff stateside on the back of an aggressive Federal Reserve and surging interest rates, which in turn have roiled currency markets,” Luis Limlingan, head of sales at Regina Capital Development Corp., said in a separate mobile message.

Limlingan said investors are set to digest economic data such as September consumer confidence, August durable goods orders, and July home prices.

More than 2.198 billion shares, valued at P20.880 billion, changed hands. Decliners trumped advancers, 189 to 28, while 37 issues were unchanged. —NB, GMA News