Philippine peso ends losing streak against US dollar

·3 min read
MANILA, PHILIPPINES: A money changer counts Philippine one thousand peso bills over a picture of US dollar in Manila 28 January 2005. (Photo: JOEL NITO/AFP via Getty Images)
MANILA, PHILIPPINES: A money changer counts Philippine one thousand peso bills over a picture of US dollar in Manila 28 January 2005. (Photo: JOEL NITO/AFP via Getty Images)

The Philippine peso on Friday (September 9) settled back to the P56 to $1 level to close at P56.82, ending its six-day losing streak that saw the local currency hit an all-time low of P57.18 on Thursday.

The peso gained 36 centavos against the greenback as the dollar fell against most world currencies.

Peso trading opened at P57.05 against the dollar on Friday, data from the Bankers Association of the Philippines (BAP) showed.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., called the local currency's rebound a "healthy correction" after recording its lowest levels for five consecutive trading days.

“The peso sharply gained versus the US dollar today, considered a healthy correction, after the peso weakened for six straight trading gains and posted new record for five straight days,” Ricafort said.

The peso strengthened against the US dollar as global crude oil prices remained at their lowest levels in seven to eight months recently, Ricafort remarked.

This "could also help reduce the country's oil imports, narrow the record trade deficit, as well as ease inflationary pressures/headline inflation, going forward," he added.

The exchange rate between the Philippines peso and the US dollar has fallen to its newest low on Thursday at P57.18 to $1.

The peso closed at P57.135 on Wednesday, making Thursday’s exchange rate 4.5 centavos lower than before.

Economists have associated a weakened peso with the country’s expanded trade deficit, meaning that more imports are coming in than exports, which often happens during the third quarter in preparation for the holidays.

But on Tuesday, economist Emmanuel Leyco mentioned that the peso’s weakening was associated not just with the US federal reserve’s rate hikes, but also with the speculation of currency traders creating what he described as a “psychological level” for the exchange rate. When he made this comment, the exchange was at P56.999 to $1.

“P57 to $1 was a psychological level and it seems that it’s like if you hit P57, anything can go next. So probably it can be P57.06 tomorrow, P57.25, because we haven’t seen the end of the movement of the US dollar,” Leyco said.

Along with the peso's rebound, the Philippine Stock Exchange index (PSEi) continued its winning streak to a second straight day.

The PSEi was up by 12.26 points, or 0.19 percent, to close at 6,606 on Friday.

The Bangko Sentral ng Pilipinas (BSP) Monetary Board will meet on September 22 to review its outlook on the economy and its monetary policy stance, that is, whether or not they will raise interest rates again in an attempt to tame inflation.

Mark Ernest Famatigan is a news writer who focuses on Philippine politics. He is an advocate for press freedom and regularly follows developments in the Philippine economy. The views expressed are his own.

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