Peso weakens further, closes near 64 to dollar

MANILA — The Philippine peso continues to lose ground and is now just a few centavos away from hitting P64 to the dollar.

The peso closed at 63.95 to the US dollar at the end of Monday’s trading, which was yet another record low for the local currency. Since the start of October alone, the peso has lost P1.175

This was despite the Bangko Sentral ng Pilipinas hiking interest rates by a steep 50 basis points in its policy-setting meeting this month. A rate hike is generally seen as supportive of the peso.

BSP Governor Eli Remolona has said that the central bank is not trying to arrest the depreciation of the peso, as doing so would impact the country’s foreign exchange reserves. The BSP, however, has been known to intervene in the market by selling dollars to temper sharp fluctuations in the exchange rate.

A weaker peso is expected to make oil purchases even more expensive as the commodity is purchased with dollars. It is also expected to stoke inflation.

The depreciation is also expected to impact the country’s sovereign debt, of which a third is owed to foreign creditors.

Prior to the US and Israel attack on Iran at the end of February, the peso was on a winning streak, clawing back to P57.665 on February 27, which was the last trading day for the month. Since the outbreak of the US war with Iran, the peso has lost P6.285 to the greenback or almost 11 percent.