Peso falls slightly amid sea incident

Peso falls slightly amid sea incident | Daily Tribune

The peso on Friday depreciated further against the US dollar after China’s aggression against Filipinos in the West Philippine Sea and perceptions of a crumbling partnership between President Ferdinand Marcos Jr. and Vice President Sara Duterte.

The peso closed at 58.80 per one dollar, slightly weaker than the P58.78 level on Thursday, data from the Bankers Association of the Philippines showed.

The local currency opened at P58.83 and peaked to P58.88, which is the new “psychological cap” in foreign exchange, Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

He said this is among the highest in more than 19.5 months or since October 19, 2022 when the peso closed at P58.945.

“The results came after recent increased tensions between China and the Philippines in disputed waters and some local political noises,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

The National Task Force for the West Philippine Sea said People’s Liberation Army-Navy and Chinese Maritime Militia vessels last Monday rammed and towed Filipino vessels being operated by the Armed Forces of the Philippines in Ayungin Shoal in the West Philippine Sea.

Statements from the government were also sought last Wednesday regarding Vice President Sara Duterte’s resignation as the secretary of the Department of Education.

President Marcos secured victory in the 2022 elections as the popularity of his predecessor Rodrigo Duterte, father of Sara, remains.

She has yet to give a clear reason for her resignation. However, the former president has been criticizing Marcos as a “weak” leader.

Inflation control

Ricafort said the Bangko Sentral ng Pilipinas (BSP) might be influenced to intervene in foreign exchange to stabilize prices of goods and services, especially that the country largely remains an importer.

“Going forward, the performance of the US dollar-peso exchange rate would partly be a function of intervention as consistently seen over the past 1.5 years,” he said.

Ricafort added inflationary pressure partly stems from oil prices, stressing it has hovered among 1.5-month highs.

He said the BSP is also monitoring market analyses on the US Federal Reserve’s next rate in managing inflation and attracting foreign investments. A higher Federal Reserve’s rate draws more foreign investments, leading to weaker peso.

“An offsetting positive factor for the peso is the increased possibility of Federal Reserve’s rate cuts. The latest Fed Fund Futures priced in nearly two rate cuts for 2024, with about 60 percent chance in September and about 80 percent chance in December,” Ricafort said.