The local currency came close to hitting Php 62 to the dollar, posting a new intraday record low of Php 61.995 to the greenback before ending the day three centavos weaker at Php 61.815:$1, according to the Bangko Sentral ng Pilipinas.
The drop led to a steep decline in the benchmark Philippine Stock Exchange index (PSEi), which shed 106.36 points, or 1.70 percent, to close at 6,158.34.
UnionBank of the Philippines chief economist Ruben Carlo Asuncion attributed the peso’s weakness mainly to external factors, particularly rising oil prices, heightened geopolitical tensions and continued dollar strength.
“As a major oil importer, the Philippines is vulnerable to higher energy costs, which increase demand for dollars and weigh on the currency,” Asuncion pointed out.
In reaction to the latest peso depreciation, Reyes Tacandong & Co. senior adviser Jonathan Ravelas warned that the peso could weaken further and reach Php 62 to the dollar in the coming days.
“The dollar gained as investors positioned ahead of yesterday’s release of the Federal Reserve July FOMC meeting minutes, hoping for guidance on the interest rate outlook,” Ravelas noted, adding that uncertainty in the Middle East is encouraging a flight to the safe-haven dollar.
In the meantime, Regina Capital Development Corporation head of sales Luis Limlingan disclosed that pressure on equities had risen as the peso’s drop heightened concerns over inflation and borrowing costs.
On the other hand, Philstocks Financial Incorporated research manager Japhet Tantiangco said the rise in oil prices and the peso’s record intraday drop were caused by fears of a further escalation of the conflict in the Middle East between the United States and Iran.
