MANILA, Philippines – The Philippines’ currency nearly reached the level of 49 to $1 yesterday following U.S. dollar’s strengthening on anticipations that President-elect Donald Trump will raise interest rates and augment economy of the world’s powerful nation.
The intraday low of peso was recorded at 48.96 to $1 following its weaker opening of 48.77.
The trading week ended with 29-centavo weaker peso, which is a record near to its fresh seven-year drop at 48.95 from Thursday’s 48.66 to $1.
On April 28, 2009, the peso declined against dollar at 48.995.
The drop of the Philippines’ currency against greenback is not peculiar as the latter strengthened amid expectations the new administration will tend inflation, leading to U.S. Federal Reserve implementing an interest rate hike.
Amando Tetangco Jr., Bangko Sentral ng Pilipinas’ Governor, stated that fluidity to the market will be provided by the monetary authorities when necessary. This is in line with the regenerated reversal of risk hovering about the market following Trump’s win shock.
Tetangco added that they will provide market fluidity and attentively track developments to handle market price behavior on another political peril globally.
It is possible that U.S. Federal Reserve may also drop its plan of raising the interest rate in December, Tetangco claimed. He said cautiousness must be raised, especially now that it could affect regional currencies largely inclusive of peso.
Diwa Guinigundo, BSP Deputy Governor, stated that for the next couple of years, the weaker peso is anticipated to add more pressure to inflation.
Over the upcoming three years, inflation forecasts have been increased by BSP. The forecast was set to 1.8 percent for 2016 by the central bank.
Guinigundo stated that BSP is not concerned about the exchange rate level. Instead, it is more about the foreign exchange market’s volatility that requires utmost monitoring. Closely tracking these invariabilities in the market is essential for it affects investors and business community’s responses.