Philippine Peso closes with a 16-year low on Marcos’ first day in office
The Philippine Peso continued to plummet to its lowest low against the US Dollar, closing at P55.06 on July 1 Friday, President Ferdinand Marcos Jr.’s first day in office.
According to the Bankers Association of the Philippines, the local currency dropped to P55.06 from P55.77 close 2 days prior, amid recession prognosis in the United States. This is the Philippine Peso’s weakest performance since 2005.
“If we see that the exchange rate is overshooting too much and that selling forex will not make the problem go away we would consider maybe increasing policy rates more than our planned 25-basis-point hike,” Bangko Sentral ng Pilipinas’ (BSP) incoming governor Felipe Medalla said in a news briefing.
The BSP governor said that it is likely that interest rates may go up to support the peso, though it would not be obliged to match policy tightening by the US Fed.
Philippine central bank’s Department of Economic Research’s managing director Zeno Ronald Abenoja explains the peso’s weakening stance to normalized monetary policy rates in the US and other advanced economies.
“Investors move their money to the US when interest rates there increase,” he told One Balita Pilipinas in Filipino. “As the dollar strengthens, other currencies weaken.”
The US Federal Reserve hiked its benchmark policy rate by 75 basis points (bps) and has signaled more increases at its future meetings to cool down inflation.
