Entertainment: Peso now region’s worst performer

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The Philippine peso ended Wednesday spot trading at 55.67 per US dollar, its weakest level in nearly 17 years, as fears of a US recession pushed the greenback to its strongest position against other currencies in two decades.

The local currency fell to its lowest level against the US dollar since Oct. 20, 2005, when it closed at 55.71: $1.

More information here: https://business.inquirer.net/352320/peso-now-regions-worst-performer#ixzz7YTBuBpVq

In a commentary, ING Bank stated that the current favorable environment for the US dollar is expected to last for the next three months as the US Federal Reserve continues to raise interest rates.

For more information, visit https://business.inquirer.net/352320/peso-now-regions-worst-performer#ixzz7YTC12h4H.

"Continual Fed tightening amid a global slowdown remains a very positive environment for the dollar," according to ING Bank. "Recessionary concerns have driven the dollar to its highest (strongest) levels since 2002."

More information here: https://business.inquirer.net/352320/peso-now-regions-worst-performer#ixzz7YTC5WJz1

According to DBS, the peso has depreciated the most among the currencies in the Association of Southeast Asian Nations' six largest economies year to date (Asean).

According to the Singapore-based bank, the peso has lost nearly 8% of its value against the dollar since the beginning of 2022, the most when compared to the Thai baht, Malaysian ringgit, Indonesian rupiah, and Singapore dollar.

For more information, visit https://business.inquirer.net/352320/peso-now-regions-worst-performer#ixzz7YTC8n4P6.

Only the Vietnamese dong gained more than 8% in value against the US dollar among the so-called Asean-6 currencies.

Mode of combating inflation

DBS stated in a commentary that because the Bangko Sentral ng Pilipinas (BSP) is "firmly on an inflation combat mode," the Monetary Board may consider policy rate hikes of 50 basis points (bps) in a single meeting, as opposed to the two previous hikes of only 25 bps.

"The BSP raised rates by a total of 175 basis points in five meetings during the 2018 cycle, with two 50 basis point hikes to quell inflation," DBS said, referring to a similar period when the peso was falling.

More information here: https://business.inquirer.net/352320/peso-now-regions-worst-performer#ixzz7YTCGPu4v

The bank said it was not ruling out raising BSP rates by 50 basis points in a single policy meeting, especially if the peso's depreciation fuels further inflation.

"The fact that the Philippine peso is depreciating at its fastest rate in about five years adds further upside pressures to imported inflation," DBS said.

This meant that higher import input prices were driving up the prices of locally produced goods. The depreciation of the local currency is one possible source of imported inflation.

For more information, visit https://business.inquirer.net/352320/peso-now-regions-worst-performer#ixzz7YTCKPIaf.

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