Peso stays weak amid inflation fears
The peso is also weaker as the market anticipates the latest Philippine inflation data that could pick up on 5 October 2022
Daily TribuneThe peso is also weaker as the market anticipates the latest Philippine inflation data that could pick up on 5 October 2022
The peso opened weak at 58.75 against the dollar, weakened further at 58.78, then recovered at 58.72 before slumping to close at 58.78.
"This matched the intraday record low of 59.00 posted on 28 September and September 29; from the intraday low of 58.53 on 30 September after the tighter reporting requirements for foreign exchange transactions," chief economist Michael Ricafort of Rizal Commercial Banking Corp. told Daily Tribune.
"The peso is also weaker as the market anticipates the latest Philippine inflation data that could pick up on 5 October 2022," the economist added.
Moreover, he said that the peso also became weaker after global crude oil prices corrected higher to one-week highs; after Russia's irreversible annexation of four occupied Ukraine regions that could complicate the Russia-Ukraine war; but global crude oil prices nevertheless lingered near nine-month lows or since early January 2022, together with the recent decline in other major global commodity prices that could lead to lower net imports trade deficits, additional rollback in local fuel pump prices, and lower inflationary pressures, among other factors.
Weak peso induces rate hike
"Weaker peso could increase the possibility of further local policy rate hike/s, translates to more intervention in the local foreign exchange market; measures to further siphon off more pesos from the financial system to reduce the pesos used to purchase dollar; greater monitoring of foreign exchange transactions," the economist said.
Among other measures to support and stabilize the peso, could be used in the policy toolkit, all of which could help stabilize the peso exchange rate, as well as overall inflation.
