Peso hits P53.48:$1

Monetary policy differences, US-China trade spat blamed
Monetary policy “divergences” and renewed trade tensions between the United States and China pulled the Philippine peso to a fresh 12-year low of P53.48 against the dollar on Monday.

The currency closed 21 centavos down from P53.27:$1 last Thursday, its lowest since a P53.55:$1 finish on June 29, 2006. Philippine financial markets were closed on Friday for the Eid al-Fitr holiday.

Asian currencies such as the peso, analysts from Singapore-based bank DBS said, are facing depreciation pressures on two major fronts.

“First, monetary policy divergences have returned to support the US dollar globally,” they pointed out.

The DBS analysts highlighted the US Federal Reserve’s plan to deliver a total of four, not three, rate hikes this year and also mentioned the European Central Bank’s announcement that it would end its bond-buying stimulus by December.

“This should keep the Philippine peso, Indian rupee and Indonesian rupiah weak beyond the key levels at 53, 68 and 14,000 respectively,” they said.

However, the DBS analysts also said that “while not immune, these three Asian currencies have been notably more resilient than their emerging market peers.”

Finally, they said “US-China trade tensions have returned despite a better-than-expected outcome at the Kim-Trump summit.”

US President Donald Trump on Friday last week reignited a trade row with China, slapping tariffs on tens of billions in Chinese imports and sparking immediate retaliation from Beijing.

The peso, described as Asia’s worst-performing currency this year, first touched the P53:$1 level on June 13 due to a widening current account deficit and the prospect of higher US interest rates.

The post Peso hits P53.48:$1 appeared first on The Manila Times Online.