The peso fell again Wednesday to close at a new record low of 57.135 against the US dollar as investors expect further rate hikes by the US Federal Reserve.
Data from the Bankers Association of the Philippines website showed the peso depreciated from 57 a dollar on Tuesday.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the peso’s decline was “due to higher US dollar vs. major global currencies on more hawkish Fed signals [about raising interest rates] recently.”
He said the peso depreciated against the greenback by a total of P6.136 or 12 percent since the start of the year. The drop could lead to higher inflation and more aggressive local policy rate hikes “to help stabilize both the peso exchange rate and overall inflation,” he said.
Ricafort said the seasonal increase in remittances in the fourth quarter, especially during the holiday season, could support the value of the peso.
Bangko Sentral ng Pilipinas Governor Felipe Medalla said on Friday the movement in the exchange rate was due mainly to a “stronger dollar.”
The BSP raised the policy interest rates by 175 basis points this year to rein in inflation and support the peso against the greenback.
The inter-agency Development Budget Coordination Committee was initially expecting the peso-dollar exchange rate to settle between P51 and P53 this year.
The local currency closed 2021 at 50.999 against the dollar, weaker than 48.023 on the last trading day of 2020.