The Philippine peso fell to a new record low, ending at 62.40 versus the US dollar. It is below its prior low of 62.265 on Aug. 28. The peso lost 13.5 centavos in one day of trade. It opened at 62.25, the greatest of the day, and then it kept falling until it hit 62.40, its low. Total trade for the day was $1.31 billion.
Most of the peso’s fall is due to global issues, experts believe. UnionBank economist Ruben Carlo Asuncion said the US currency is gaining strength from the increase in US Treasury yields, prospects for another Federal Reserve rate hike and high oil prices related to tensions in the Middle East. These conditions are pushing investors into dollar assets, creating concerns about inflation and import costs for countries such as the Philippines that rely on oil imports.
The 10-year US Treasury yield climbed to around 4.78 percent, one of its highest in more than a year, RCBC economist Michael Ricafort said. He also said that Fed Chair Kevin Warsh warned that US inflation has not fallen down sufficiently, which means the Fed may maintain interest rates high for longer.
Asuncion said the peso could continue to trade under pressure as investors await further US economic data and hints on the Fed’s next steps. He cautioned that the peso could continue to suffer from the effects of a strong currency, rising global interest rates and expensive oil.
But he did have some positive news to report: money flowing into the Philippines from overseas Filipino workers, BPO businesses, tourism and foreign investors might help offset the peso’s losses. The peso will likely be influenced most by global developments in the next months, he said.
