Peso nearly hits P54:$1 level in morning trade
MANILA, Philippines — The Philippine peso on Friday almost touched the P54-per-dollar level in morning trade as investors flee riskier markets amid concerns about rising domestic inflation and contagion from emerging markets, among others.
The local currency opened at P53.85 against the greenback on Friday.
The peso also posted an intraday low of P53.975 versus the dollar, the weakest level since 2005, while its best showing so far stood at P53.85 against the greenback.
“Since inflation is higher, so is cost of doing business, and also risk premium,” Luis Limlingan of Regina Capital said.
“The [Federal Open Market Committee] may also raise rates in September 25-26 FOMC meeting. So flight to quality,” Limlingan added. “[Emerging markets] contagion also having an effect.”
Philippine inflation rose to 6.4 percent in August, the highest level since the 6.6 percent posted in March 2009. In the first eight months, inflation averaged 4.8 percent, well above the central bank's 2-4 percent target range for the year.
Meanwhile, worries that financial crises in Argentina, South Africa and Turkey will spill over into major economies fuelled a blood-letting across Asia, which filtered through to Europe.
As the US economy has recovered, the Fed has raised the benchmark lending rate seven times since December 2015, twice this year under Jerome Powell, and is expected to hike again in September and December.
According to Limlingan, the peso may weaken further amid the expected surge in demand for dollars for the import season this month.
The peso on Thursday closed at P53.8 against the dollar, the lowest level since it closed at P53.985 per dollar on Dec. 7, 2005. — Ian Nicolas Cigaral with Agence France-Presse
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