MANILA, November 27 ------ For the second time this month, and the third time in history, the peso sank to a record low of P59 to the US dollar. According to the website of the Bankers Association of the Philippines, the peso opened at 58.98 and closed at 59 to the dollar at the end of Tuesday's trading. The peso first depreciated to this historic low on October 17, 2022, and sank to this level again just last week on Nov. 21.
The Bangko Sentral ng Pilipinas had earlier said that the peso's depreciation was not because of its weakness but because the US dollar was strong. With the US Federal Reserve seen as unlikely to speed up cutting interest rates, the dollar has strengthened against many other currencies. The peso's depreciation is expected to make imports of dollar-denominated commodities such as oil more expensive. Other imports such as rice, which makes a big part of the consumer price index, are also paid for in dollars.
One analyst said that a weaker peso vis-a-vis the dollar may affect prices, but the weaker currency would not be the main driver of inflation. "I don't think the peso will be the biggest contributor to inflation. I think it's going to be the recent string of really poor weather affecting our agricultural sector," said William Cabangon, president of AAA Securities.
Cabangon however also acknowledged that November would be a "tough month" for inflation. Another analyst meanwhile said she hopes that the expected influx of remittances from overseas Filipinos in time for the holidays will help keep the peso stable. and that the BSP could implement another rate cut within the year with inflation remaining within the government's target range. "I think that is our hope and that the peso stabilizes with the ongoing stream of OFW remittances," said Cristina Ulang, head of research at First metro Investment Corp.
The US dollar rallied against its Canadian equivalent, Mexico's peso and China's yuan on Tuesday following US President Donald Trump's statement that he would raise tariffs on US imports from these countries. The dollar however dropped against the euro, pound and yen, with the latter benefiting from its status as a haven investment, analysts said.
Source: news.abs-cbn.com
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