Peso trades at P57 for the first time
THE PHILIPPINE PESO touched the P57 level against the US dollar for the first time during intraday trading on Monday, as investors continued to flock to the safe-haven currency.
The local unit closed at a fresh all-time low of P56.999 per dollar on Monday, down by 22.90 centavos from its P56.77 finish on Friday, Bankers Association of the Philippines data showed.
The peso has weakened by 11.76% or P5.999 from its P51-per-dollar close on Dec. 31, 2021.
The local currency opened Monday’s session at P56.85 against the dollar. The peso’s weakest showing was at P57 versus the greenback, while the intraday best was at P56.80.
Dollars exchanged inched up to $976.45 million on Monday from $936.95 million on Friday.
“The peso closed near the P57 level today following the release of strong US employment reports for August 2022,” a trader said in an e-mail.
Data from the US Labor department showed the economy added 315,000 jobs in August, marking the 20th straight month of jobs growth.
However, the US unemployment rate also rose to a six-month high as nearly 800,000 people entered the labor market, driving the size of the labor force to also a record high.
The jobs data could support further rate hikes by the US Federal Reserve this month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Peso was also weaker after the new record-high outstanding national debt,” Mr. Ricafort added.
The National Government debt hit another record as of end-July, inching up 0.8% or P96.09 billion to a record-high P12.89 trillion from P12.79 trillion as of end-June. This was attributed to additional domestic and local borrowings, as well as a weaker peso.
The Bureau of the Treasury (BTr) said the debt pile jumped by 9.9% since the year started, after the government borrowed P1.16 trillion more.
“However, the local currency might recover as expectations of elevated Philippine inflation might bolster hawkish policy bets for the BSP,” the trader said.
Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla on Friday said they have done enough to stabilize the peso after a series of rate hikes.
“We can say we have done enough. There is no peso problem, it’s a dollar problem,” Mr. Medalla said during the virtual Reuters NEXT Newsmaker event on Friday.
The BSP has raised benchmark rates by 175 basis points since May to tame inflation. It sees inflation averaging 5.4% this year, beyond its 2-4% target.
Mr. Medalla said the Fed’s next policy move will be a “big factor” for the Monetary Board to consider at their Sept. 22 meeting, especially as the US central bank will also meet on Sept. 20-21.
The Philippine Statistics Authority is scheduled to release the August consumer price index data today (Sept. 6).
A BusinessWorld poll of 13 analysts yielded a median estimate of 6.4% for August inflation, well within the BSP’s 5.9-6.7% forecast for the month and unchanged from July pace.
The trader expects the peso to move between P56.80 and P57 against the dollar on Tuesday, while Mr. Ricafort gave a higher forecast range of P56.80 to P57.05. — K.B.Ta-asan
