Photo from Jhay Jalbuna/THEPHILBIZNEWS
The peso dropped anew to its lowest level in almost 13 years as investors fled to dollar assets, spooked by the country’s record high inflation for August with 6.4% that surprised even President Rodrigo Duterte’s economic and financial managers.
As per Philippine Statistics Authority (PSA)official data released recently, this is the fastest and highest inflation that is recorded after almost 10 years when the registered inflation rate was 6.6%in March 2009.
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It opened at P53.9310 and closed at P53.8640 per US dollar but trading session at P53.80 — its lowest level since December 2005. This was also the steepest single day drop for the peso since June 13, 2008. In the region, the peso was the biggest loser in the region Thursday, amid weaker currencies across the board.
Jonathan Ravelas, BDO Unibank Chief Strategist said the currency’s weakness “stems from a series of unfortunate events such as importers’ demand for the US currency, rising inflation, and fears of contagion from an emerging market rout.”
Playing as a pilot, he imitated the warning message of airline being given to the passengers when flying through rough skies. Ravelas said, “Ladies and gentlemen, the captain has turned on the fasten seat belt sign. We are now crossing a zone of turbulence. Please return your seats and keep your seat belts fastened. Thank you.”
There are about $911.5 million changed hands on the foreign exchange trading platform of the Bankers Association of the Philippines, with most local banks selling their pesos and the central bank seen intervening to modulate the volatility.
The Chief Strategist of BDO added, “There could still be some weakness”, adding that market technicals point to P54 as the next resistance.
“We are continually monitoring the developments overseas, particularly the Latin American economies as a major source of contagion and the statements from the BSP,” he added.
However, despite what is going on with the market, Ravales hopes that the peso would eventually comes strong and back to P53.50 or even P53 once dollar influx from overseas workers come in ahead of the Christmas season through foreign remittances.