Peso at two-year low against dollar
Metro Manila, Philippines — The peso slid to a two-year low against the dollar at market’s close on Thursday, Nov. 21.
The local unit ended trade at ₱59 to the dollar, depreciating for the third straight day. It last touched the level on Oct. 17, 2022.
Michael Ricafort, Rizal Commercial Banking Corporation chief economist, pointed to a number of local and global factors for the weaker peso, including “some geopolitical risk related to the Russia-Ukraine war lately.”
“The markets also anticipate the seasonal increase and conversion to pesos for OFW remittances to finance holiday- and Christmas-related spending next month,” he said.
On Nov. 14, the ING Bank said the ₱59:$1 exchange was “likely” as the peso was “one of the worst performers in Asia last month (October), with rate cut expectations by BSP (Bangko Sentral ng Pilipinas) next month (December) adding fuel to the fire.”
For the second time in the year, the BSP reduced the interest rate by 25 basis points to 6% from 6.25% in October. The central bank hinted at another possible 25-basis-point rate cut by December.
“Going forward, the performance of the US dollar/peso exchange rate would be partly a function of intervention/defense as consistently seen over the past two years,” Ricafort said.
He added this was amid the need to better manage inflation, or the rate of price increase in goods and services.
The Development Budget Coordination Committee has a peso-dollar exchange rate assumption for 2024 of ₱56 to ₱58. It was a revision from the ₱55 to ₱57 range.
