Economists are now becoming alarmed after the Philippine peso plunged to a new all-time low against the United States (US) dollar for the third consecutive day, closing in at P58.49 on Thursday (September 22).
Peso lost 49 centavos in value to the US dollar from Wednesday’s P58.1 against $1.
The local currency fell after the US Federal Reserve announced another interest rate hike of 75 basis points for the third time.
The previous trends recorded were on September 2, after Peso fell to P56.77:$1, September 5 at P56.999:$1, September 6 at P57.00:$1, September 8 at P57.18:$1, September 16 at P57.43:$1, and on September 20 at P57.48:$1.
To date, the Philippine peso has depreciated by 14.7%, or a total of P7.491, from last year’s P50.999:$1.
As a precaution, the Bangko Sentral ng Pilipinas (BSP) has already hiked the interest rate by 50 basis points, with the borrowing rate at 4.25%, the deposit rate at 3.75%, and the lending rate at 4.75%, bringing the total interest rate hike this year to 250 basis points.
“The intention is not to target a particular level for the exchange rate. That is not the policy objective. In deciding on the appropriate stance of monetary policy, the priority is to bring inflation back to within the target band over the medium term,” BSP’s deputy governor, Francisco G. Dakila Jr., said.
Meanwhile, an expert warned that the Philippine peso could depreciate further to as low as P60:$1.
In an interview with reporters on Wednesday, Metropolitan Bank and Trust Co. (Metrobank) treasurer and head of the Financial Markets Sector, Fernand Antonio Tansingco said that the P60:$1 could be avoided “if we can get back the appropriate interest rate differentials.
“Narrow interest rate differential is not only on the exchange rate but also on inflationary effect that feeds into the cost of goods so while our central bank is inflation targeting, they are not really looking at the exchange rate. It might be challenged until we can contain the depreciation of the peso,” Tansingco said.
Marvin Joseph Ang is a news and creative writer who follows developments on politics, democracy, and popular culture. He advocates for a free press and national democracy. Follow him on Twitter at @marvs30ang for latest news and updates. The views expressed are his own.
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